Stocks and bonds are both entering troubled territories in Asian markets. At present, the equity markets in the orient are currently facing to face with the high tides of inflation pressure. At the same time, the rate of the USD increased in comparison to the local currencies, which will further the financial pressure on Asian markets.
On the other hand, some economists suggest that the increase in USD value and inflation will pave the way for global economic growth. Shanghai, the commercial hub of China, is currently recovering from the easing of the pandemic restrictions in the region after two months. However, the trade and business activity in Chinese markets has remained relatively slow to date.
According to the MSCI index for Asia-Pacific stock markets, it was depreciated by 0.7%. It is worth noting that this index does not account for Japanese stocks. The Hong Kong index suffered from a 1% drop, as reflected in the Heng Seng Index. On the contrary, the Nikkei index was appreciated by 0.6% showing a better outcome for the Japanese stakeholders.
Meanwhile, S&P 500 futures gained 0.4% and remained in the moderate tier. Meanwhile, the STOXX 50 futures for European markets and FTSE futures gained 0.5% each. The economic conditions in Europe are suffering under the increasing cost of food and energy prices. The latest reports suggest that a wave of 8.1% inflation has hit the Eurozone with full force.
Global Index and Changing Geopolitical Situation
Kit Juckes is an analyst with the Societe Generale who recently told media that CPI hikes are visible in the consumer markets in the USA, UK, Canada, Sweden, and Australia for June. Juckes also warned about an abrupt start of the summer season, considering the lack of clarity about a solid financial policy by Central Banks and Federal governments.
USD value slipped for three consecutive weeks, and it rose to 129.23 yen, a 2-week high in Asia. On the other hand, German bond yields generated the highest returns in a decade; meanwhile, the Treasury yields gained 10 points. Canadian Central Bank is planning to increase its prospect target from 50 bps to 1.5%.