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Asian markets extend rally as earnings season looms

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The spread of the highly transmissible Delta variant is causing some concern on world markets, though some governments are now considering approving third, booster doses./AFP
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Jul 13, 2021 - 10:29 AM

HONG KONG, CHINA — The rally in global stocks extended into Asia on Tuesday as optimism about the upcoming earnings season outweighs worries over the fast-spreading Delta virus variant that is forcing leaders to reimpose containment measures.

Hope that central banks will maintain their ultra-loose monetary policies, or taper them very gradually, is also providing support to traders as economies recover from the ravages of last year’s pandemic-induced collapse.

The release of key data and other events will also be closely tracked this week as markets try to get an idea about the state of the global rebound, with Chinese growth, US inflation and several central bank decisions in view.

Wall Street’s three main indexes chalked up more records as investors prepared for the earnings deluge with the release of top banks including JP Morgan and Goldman Sachs later in the day.

Observers are predicting the period could be the best in more than two decades, though they warn that the readings would have to be blockbuster to build on the latest markets rally, with many traders “buying the rumour and selling the news”.

Hong Kong led the gains in Asia, rising 1.7 percent, while Tokyo, Shanghai, Seoul, Singapore, Mumbai, Wellington, Bangkok and Taipei also enjoyed gains.

However, Sydney gave up early advances to end flat, while Manila and Jakarta also slipped. London and Paris opened higher but Frankfurt edged down.

Covid-19 continues to cast a dark shadow as new case numbers rise around the world, with the United States and Britain — which are well advanced in their vaccination programmes — also seeing high numbers, though with lower deaths and hospitalisations.

Some governments are also now considering approving third jabs for those who have had their full dosage.

The sharp rise in infections has forced some governments, including in France and Greece, to impose restrictions again to quell the spread, leading to worries about the impact on the economic recovery.

That concern has also weighed on oil prices, which suffered their first fall Monday after a two-day gain. Though they edged up slightly in Asian trade.

“The robust crude demand outlook is starting to take a hit as many countries continue to struggle with the more infectious Delta variant,” said OANDA’s Edward Moya.

“Even the US is seeing a surge as low-vaccinated states are behind the 47 percent increase in cases over the previous week.

“This pandemic once again feels far from over, and that is dragging down optimism for a robust crude demand story going forward.”

Federal Reserve chief Jerome Powell’s comments to lawmakers on central bank policy will be keenly watched Thursday for clues about its outlook in light of the fast US recovery and the impact of the Delta variant.

That comes after New York Fed boss John Williams said Monday that important parts of the economy were not rebounding enough for policymakers to wind their vast monetary easing measures.

Key figures around 0720 GMT 

Tokyo – Nikkei 225: UP 0.5 percent at 28,718.24 (close)

Hong Kong – Hang Seng Index: UP 1.7 percent at 27,975.61

Shanghai – Composite: UP 0.5 percent at 3,566.52 (close)

London – FTSE 100: UP 0.3 percent at 7,147.57

Euro/dollar: DOWN at $1.1858 from $1.1864 at 2100 GMT

Pound/dollar: DOWN at $1.3873 from $1.3886

Euro/pound: UP at 85.47 from 85.42 pence

Dollar/yen: UP at 110.32 from 110.35 yen

West Texas Intermediate: UP 0.4 percent at $74.40 per barrel

Brent North Sea crude: UP 0.4 percent at $75.49 per barrel

New York – DOW: UP 0.4 percent at 34,996.18 (close)

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