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Growing concerns over the Covid-19 pandemic weigh on markets, the day England lifts its remaining restriction on coronaviruses despite warnings that the move could allow the emergence of new variants.
Stocks fell in Asia-Pacific markets, Japan Nikkei down 1.25% and that of Hong Kong Hang Seng down 1.6% at the end of the session. Rising Delta variant cases threaten to hamper global recovery as restrictions and lockdown restrictions are reintroduced in some Asia-Pacific countries.
Thailand, for example, reported its fourth consecutive day of increased infections today (11,784), as his country struggles to cope with its worst outbreak to date.
And in Australia, a lockdown has been extended in Victoria state as authorities attempt to control an outbreak of the “wildly infectious” variant of the Delta coronavirus.
Concerns about rising inflation – and the possibility of a premature tightening of central bank monetary policy – are also worrying investors, after the US CPI index hit a 13-year high last month and British inflation exceeded the target.
As Reuters Explain
Economists at Bank of America lowered their forecast for economic growth in the United States to 6.5% this year, from 7% previously, but maintained their forecast of 5.5% for next year.
“When it comes to inflation, the bad news is that it will likely stay high in the near term,” they said in a note, highlighting their last reading of their proprietary inflation meter which remains high.
“The good news is… we are probably near the peak, at least for the next few months, as base effects are less favorable and scarcity pressures shift from goods to services. “
Kyle Rodda from IG says investors are increasingly concerned about economic fundamentals, after a strong recovery driven by ‘extraordinary’ stimulus and optimism about vaccines:
There are clear signals that the markets are feeling a bit disrupted by the global economic outlook. Of course, that doesn’t mean a quick or impending crash is upon us. But that after 6 to 9 months of unbridled optimism, underpinned by extraordinary stimulus and vaccine rollout, the best part of the economic expansion may have already been seen, and the peak of the cycle is predictable and was evaluated -in.
Perhaps this is an attribution error, and possibly due to what may turn out to be temporary factors related to the spread of the Delta variant. Nonetheless, the price signals are there for a slowdown in growth, as market players are currently being forced to think about the question “what next?” “.