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© Reuters. File photo: On October 1, 2020, a staff member of the Tokyo Stock Exchange (TSE) appeared in an empty trading space in Tokyo, Japan. REUTERS/Issei Kato
Author: Andrew Galbraith
SHANGHAI (Reuters)-Asian stock markets fell sharply on Wednesday, giving up early gains, while the U.S. dollar strengthened as investors worried that a rapidly spreading variant of the coronavirus might hinder global economic recovery.
However, European stock markets are expected to open slightly higher after a sharp decline at the beginning of this week, and the European Central Bank meeting on Thursday is expected to convey a dovish tone.
Increased by 0.16%, Germany rose by 0.07%. Futures rose 0.08%.
At present, the Delta coronavirus variant has replaced inflation as the main source of investor attention. South Korea reported daily new infection records on Wednesday.
Last week, data showed that consumer prices in the United States soared in June, raising concerns that the Fed might end emergency stimulus measures sooner.
Shifting from a debate about whether the price spike is temporary to a thorough worry about the impact of the latest COVID-19 spike, the U.S. 10-year Treasury yield has fallen by more than 20 basis points in a week Safe-haven assets. Before the rebound, it had fallen nearly 4% from last Wednesday’s high to Monday’s low.
On Wednesday, MSCI’s broadest index in the Asia-Pacific region except Japan reversed its early gains to a decline of 0.14%, and this week’s decline expanded to more than 2%.
Seoul fell 0.29% and Hong Kong fell 0.46%.
It rose 0.6% after hitting a six-month low the previous day as investors bought cyclical stocks before the long weekend marking the opening of the 2020 Tokyo Olympics, and the surge in exports in June boosted hopes for an export-oriented economy restore.
Chinese blue chip stocks also rose, rising 0.81%
Kay Van-Petersen, a global macro strategist at Saxo Capital Markets in Singapore, said: “The level of trading volume, I think the sporadic whiplash price movements tell you that there is not much belief.”
But even though he said that the peak of global economic growth may have passed, central bank easing policies continue to provide strong support for global asset prices, even if they begin to signal a reduction in asset purchases.
“Since 2008, the G4 central bank’s balance sheet has compounded 15%. My view is that this situation will not stop. It will not be closed.”
The price of US Treasury bonds fell slightly, and the 10-year Treasury bond yield rose to 1.2151% from the previous trading day’s closing price of 1.209%. The 2-year yield was 0.2037%, which was 0.194% higher than the closing price.
But in response to the stock market’s concerns about the surge in global COVID-19 infections, the U.S. dollar remained near a three-month high on Wednesday.
Rob Carnell, chief economist for ING Asia Pacific, said: “Although the vaccination rate limits the severity of any symptoms of new cases, some parts of the world are being dismissive of rising infections, but there is almost no place in the world that can completely Ignore this.”
The exchange rate finally rose 0.08% to 93.041, and the euro fell 0.07% to 1.1771 US dollars against the US dollar. The dollar rose 0.05% against the yen to 109.89.
As industry reports showed an unexpected increase in US oil inventories, oil prices continued to fall after rebounding on Tuesday. [O/R]
US West Texas Intermediate crude oil fell 0.46% to US$66.89 per barrel, and the transaction price was US$69.06 per barrel, down 0.42% on the day.
Due to the rebound in US yields, the stock price fell 0.07% to US$1,808.84 per ounce.
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