Asian stock markets fall due to COVID-19 and continuing “bad news” on the frontier of inflation.


© Reuters.

Gina Lee

Investing.com-On Monday morning, Asia-Pacific stock markets fell to a one-week low as continued concerns about the impact of the global economic recovery and inflationary pressures dampened investor sentiment.

As of 10:13 pm Eastern Time (2:13 am GMT), the Japanese stock market was down 1.69%, and the South Korean stock market was down 1.20%.

In Australia, after the release of the minutes of the latest policy meeting on Tuesday, the index fell 0.98%.

The Hong Kong stock market fell 2.18%.

China fell 0.25% and China fell 0.23%.

The US stock market also closed in a downward trend, falling for four consecutive weeks. At the same time, US Treasury bonds continued to rise, with the benchmark 10-year Treasury bond yield further below the 1.3% mark.

The debate over whether inflationary pressures will cause central banks to start shrinking assets and slow the economic recovery from COVID-19 has witnessed the suspension of the recent rebound in global stock markets.

Investors also digested the decline in Treasury bond yields. Some investors see this trend as a sign that the economic recovery is slowing, as countries re-implement restrictive measures to contain the COVID-19 outbreak involving the Delta variant, while others believe that the bond rebound is slowing.

Lori Calvasina, head of US equity strategy at RBC Capital Markets, said in a report: “The background of COVID-19 is just one of several factors that may adversely affect reinflation trading.”

The report added that other factors include the Federal Reserve’s possible reduction of stimulus measures and an earlier rate hike than expected.

Fed Chairman Jerome Powell insisted in his testimony to Congress last week that the rise in inflation may be a temporary phenomenon. However, the market has not yet fully believed in his assurance that the supportive monetary policy will continue for some time.

In other aspects of the central bank, the two sides will announce their policy decisions on Thursday.

Now everyone’s eyes are on the UK, the remaining COVID-19 measures will be cancelled on July 19, and rising inflation will continue to be the focus.

Bank of America (NYSE:) analysts lowered their forecast for US economic growth in 2020 from the previous 7% to 6.5%, but maintained their forecast of 5.5% for 2022.

“As for inflation, the bad news is that it may stay high in the short term… The good news is… we may be close to the peak, at least in the next few months, because the base effect is less favorable and shortage pressures shift from goods to services,” They said in a report.

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