APAC markets rise after in-line US inflation eases concerns
05:00, 13 December 2021
Asia-Pacific markets rose on Monday after US inflation data came in line with expectations on Friday, easing some of the concerns around the pace of policy tightening.
Investors now look forward to key central bank meetings from around the world, including the US Federal Reserve (Fed) meet, scheduled for the week.
Jefferies in its weekly note said that the market has already priced in “a lot of near-term hawkishness” in the US Federal reserve policy.
Hong Kong, Australia, Japan up
“The liquidity withdrawal has begun; question is how far and fast that liquidity withdrawal will proceed. Markets have worried about a ‘policy mistake’ whereby Fed kills the cycle. Friday’s inflation data allayed some of the concerns as the highest inflation remained mostly in supply-chain disrupted areas,” added Sherif Hamid of Jefferies.
On Monday, Hong Kong’s Hang Seng Index rose 1% by lunch break, while Japan’s Nikkei 225 Index and Australia’s S&P/ASX 200 Index climbed 0.9% and 0.6% by the afternoon session.
Incremental monetary easing from China, via banking reserve ratio requirement (RRR) cut and foreign exchange RRR hike announced last week, supported the risk-on sentiment in Asia-Pacific markets.
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China supports liquidity via RRR policies
“It is positive for broader markets because it is Chinese growth supportive but its also positive for risk because it will act to reduce inflationary pressure on global central banks. EM (emerging market) central banks have been scrambling to hike in order to get in front of inflation so any relief from a weaker CNY is going to be welcome. More will be needed, but these are small steps in the right direction,” said John Salvesen of Jefferies.
“By hiking the RRR on FX deposits, we believe the PBoC is sending a clear signal that it does not want to see a stronger yuan after a period of rapid appreciation against its basket (and a bit against the USD),” added Nomura in a note.
Tech stocks led gains in Hong Kong on Monday with heavyweights Alibaba Group and Tencent Holdings among the top 10 performers on the benchmark index, up 3% and 2.6% respectively by lunch break.
Miner and energy stocks rise in Australia
In Australia, the mining and energy sectors gained over 2% each by Monday afternoon. ASX-listed stocks in BHP Group was up 2.8% despite facing a speed bump on its road to acquire Canadian mining company Noront Resources.
Ramsay Health Care fell over 1% after announcing a $1bn acquisition of UK-based mental healthcare provider Elysium Healthcare.
Natural gas producer Senex Energy rose 2.9% on Monday after its board recommended the company’s takeover by South Korea’s POSCO International in a deal worth over AUD845.16m ($606.4m).
Read more: Chinese central bank to cut reserve requirement next week
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