HONG KONG: Asian markets were mixed Friday following the previous day's gains, with eyes on the release of key US jobs data later in the day, while investors are also assessing the outlook for central bank monetary policy in the face of surging inflation.
Equities around the world enjoyed a healthy run-up Thursday after the Federal Reserve finally announced its plan for tapering the vast bond-buying programme that has provided crucial support since it was put in place at the start of the pandemic.
The news removed a lot of uncertainty about officials' response to a spike in inflation that is expected to last a lot longer than previously thought, and follows moves in other countries to step back from their ultra-easy measures as the world economy recovers.
Asia stocks catch Wall St cheer but China caps gains
However, the Bank of England's decision Thursday not to lift rates shocked traders, who had taken recent indications from boss Andrew Bailey that it would do so.
While its board signalled a rise was still on the cards in the coming months, it raised questions about how quickly the financial leaders would tighten policy, with forecasts for the Fed's own hiking timeline put back.
Bond yields, which indicate future pricing for interest rates, sank after the announcement and raised concerns about further uncertainty, particularly as inflation remains doggedly high owing to supply chain snarls, high commodity prices and wage growth. That has fuelled talk of a period of stagflation when prices surge but economic growth stalls.
"Rates are a global market," Subadra Rajappa, at Societe Generale, said. "Global central banks seem to be pushing back on market expectations for aggressive policy action."
The BoE decision also hammered the pound, which sank against the dollar, and it struggled to recover on Friday sitting below $1.35, having been at $1.37 beforehand.
Still, Wall Street enjoyed another record, with tech firms the main beneficiaries as they are more susceptible to higher borrowing costs.
The S&P 500 and Nasdaq both chalked up new highs for a fifth straight day, though the Dow dipped. Markets in Paris and Frankfurt were also at new peaks.
However, Asian investors struggled to pick up the baton. Tokyo, Shanghai, Hong Kong and Seoul all fell, while there were gains in Sydney, Singapore, Wellington, Taipei and Jakarta. Manila jumped more than one percent as virus measures were eased in the Philippine capital.
Oil shot up after OPEC and other major producers stuck to their plan to modestly lift output despite surging demand and concerns about supplies.
The move also ignored a call from US President Joe Biden and other big energy consuming nations to open the taps further.
Friday's gains came after a recent heavy retreat in prices following news that Iran nuclear talks were progressing and could lead to the removal of sanctions barring the sale of Tehran's crude on world markets.
Still, OANDA's Edward Moya expects the commodity to remain buoyed.
"The selloff in WTI crude won't last long as the oil market is still in deficit and whatever response the US has will likely be temporary relief and nothing that brings US production back to the levels seen under the Trump administration," he wrote in a note.
"The mid-$70s should prove to be a very attractive entry for energy traders."
Key figures around 0300 GMT
Tokyo - Nikkei 225: DOWN 0.7 percent at 25,593.61 (break)
Hong Kong - Hang Seng Index: DOWN 0.8 percent at 25,020.03
Shanghai - Composite: DOWN 0.1 percent at 3,523.55
Dollar/yen: DOWN at 113.70 yen from 113.73 yen
Euro/dollar: DOWN at $1.1542 from $1.1551
Euro/pound: UP at 85.59 pence from 85.58 pence
West Texas Intermediate: UP 1.1 percent at $79.66 per barrel
Brent North Sea crude: UP 0.9 percent at $81.23 per barrel
New York - Dow: DOWN 0.1 percent at 36,124.23 (close)
London - FTSE 100: UP 0.4 percent at 7,279.91 (close)
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