Fri. Mar 29th, 2024
picture credits- business today

On Friday, Asian shares rebounded from a three-month low, all thanks to a late-day rally on Wall Street. Global shares bounced, as investors focused more on optimism about the global economic recovery than rising tensions between the West and China. European stocks too saw a rebound, with Euro Stoxx futures rising 0.8% and Britain’s FTSE futures gaining 0.61%.

Additionally on Thursday, MSCI’s ex-Japan Asia index rose 1.43% after hitting a near three-month low, as the Shanghai Composite Index gained 1.53%, breaking a three-day losing streak.

On contrary on Thursday, Chinese shares fell near a three-month low hit earlier in the month. This came after regulatory stance that was taken by European Union earlier this week. European Union joined its Washington’s allies this week in imposing sanctions on officials in China’s Xinjiang region over allegations of human rights abuses. This in turn prompted retaliatory sanctions from Beijing.

Yasutada Suzuki, head of emerging market investment at Sumitomo Mitsui Bank, commenting on the nature of sanctions imposed by both the sides, stated that “All the sanctions so far have been largely symbolic and should have little economic impact. But the Sino-U.S. confrontation is affecting market sentiment. It could take some time for them to come to any compromise,”. He further added that “Recent falls in Chinese shares have been worrying but there’s no change in the fact the Chinese economy is recovering,”

While, the Nasdaq Composite added just 0.12%, the Dow Jones Industrial Average rose 0.62% and the S&P 500 gained 0.52%.

Cross asset strategist at Nomura Securities, Masanari Takada maintained that “It’s month-end, quarter-end and for Japanese players, financial year-end, so we are seeing random flows from all kinds of players,”.

But it is to be noted that those who were leading reflation trade based on their positive view on the Chinese economy will now predictably close their positions.

The surge in the Asian market shares, S&P and Nasdaq, as aforementioned, comes after a strong economic growth being predicted by rating agencies around the world. Investors’ confidence is riding on the optimism of US pro stimulus package introduced last month. Adding to the exuberance of the investors, US Labor Department data recently showed claims for unemployment benefits being dropped to a one-year low, a sign that strongly shows that the US economy is on the verge of a stronger growth as the public health situation improves.

In his first formal news conference, US President Joe Biden said that he would double his administration’s vaccination rollout plan after reaching the previous goal of 100 million shots, which would be 42 days ahead of schedule.

Chief investment officer, Soichiro Matsumoto stated that “Vaccination in continental Europe is falling behind the schedule. Relative to the US, economic reopening will likely be delayed as some countries are forced to impose lockdowns,”.

This has put pressure on the euro, which licked its wounds at $1.1780 after its sharp fall, as low as $1.1762 overnight. It was its lowest levels since November.

The dollar also rose to 109.17 yen, within a striking distance from last week’s nine-month high of 109.365 yen.

Oil prices on the other hand rebounded a tad from a 4% drop on Thursday after their third straight week of losses on worries about a further reduction in demand. Reduction in demand was also caused by OPEC’s stringent demand to keep the oil prices high, to increase their profits.

picture credits- oil and gas journal

Additionally, this is also due to the fact that the pandemic has led the people to say indoors and avoid unnecessary travels around the world. With a new surge in covid positive cases recently around the world, international travelling has again taken a hit, which has not only affected the aviation sector but also the oil demand.

In addition to Europe, major developing economies such as Brazil and India are also struggling with a resurgence in COVID-19 cases.

By Shivani Khanna

A woman who believes in equal rights and aspires to inspire people through her writings. I aspire to contribute to the economic world and society with diligence and thus being an economic advisor tops my career ambitions . I currently am pursuing Economic honours ( at undergrad level) from delhi university.