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APAC markets rise after in-line US inflation eases concerns

By Mensholong Lepcha

05:00, 13 December 2021

Stock market charts
Asia-Pacific markets rose on Monday after US inflation data came in line with expectations – Photo: Shutterstock

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.

US500

4,577.30 Price
+0.240% 1D Chg, %
Long position overnight fee -0.0263%
Short position overnight fee 0.0041%
Overnight fee time 22:00 (UTC)
Spread 0.8

US100

15,918.20 Price
+0.310% 1D Chg, %
Long position overnight fee -0.0263%
Short position overnight fee 0.0041%
Overnight fee time 22:00 (UTC)
Spread 1.8

US30

36,172.80 Price
+0.150% 1D Chg, %
Long position overnight fee -0.0263%
Short position overnight fee 0.0041%
Overnight fee time 22:00 (UTC)
Spread 2.2

HK50

16,436.80 Price
+0.360% 1D Chg, %
Long position overnight fee -0.0260%
Short position overnight fee 0.0040%
Overnight fee time 22:00 (UTC)
Spread 5.0

“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

Markets in this article

9988
Alibaba Group
70.4 USD
-0.1 -0.140%
AU200
Australia 200
7180.0 USD
89 +1.260%
AU200
Australia 200
7180.0 USD
89 +1.260%
AU200
Australia 200
7180.0 USD
89 +1.260%

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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