Asian stock markets bounced back on Wednesday after Wall Street plunged from a record high due to weak retail sales in July. Shanghai, Tokyo, Hong Kong, and Sydney saw a positive return to form.
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Asian Stock Markets
As reported by the Associated Press, “Investors watched for the Fed’s release Wednesday of minutes from its July policy meeting for an update on when the central bank might start reducing bond purchases that pump money into the financial system and look at raising interest rates.”
Policy stabilization should begin shortly according to some Fed officials, based on strong hiring growth and escalating inflation.
However, others are more cautious and believe the Fed should keep tabs on how economic data develops to ensure total recovery. Yeap Jun Rong of IG said in a report, “There seems to be an absence of positive catalysts to boost sentiments.”
“Market sentiments may thus largely remain on hold, with the upcoming Fed minutes on watch next.”
Despite the recovery of Asian stock markets, Japan reported “flat” July exports on Wednesday, as the Shanghai Composite Index increased 0.3% to 3,469.43 and the Nikkei 225 in Tokyo grew 0.6% to 27,591.53.
“The Hang Seng in Hong Kong was 0.4% higher at 25,930.80,” the Associated Press reports.
Following the Asian stock markets trend, Seoul’s Kospi jumped 0.8% to 3,169.01 and the S&P-500 in Sydney raised less than 0.1% to 7,532.90. “New Zealand, Singapore, and Bangkok advanced while Jakarta declined.”
Impact In The U.S.
While Asian stock markets seem to be on the way back up, the S&P 500’s 0.7% loss on Wall Street was its most significant drop in a month. The resurgence of COVID-19 through the Delta variant is affecting the U.S. economic recovery.
Further, the Dow Jones Industrial Average dropped 0.8% to 35,343.28, while the Nasdaq composite fell 0.9% to 14,656.18.
Amid this outlook, “technology and consumer-oriented stocks declined as concern about the virus’s impact on the economy grew,” while health care stocks made progress.
According to the Commerce Department, U.S. retail sales fell 1.1% in July, signaling a deacceleration at this time of year beyond analysts’ expectations. Consumer sentiment was also hit according to a survey disclosed on Friday.
However, despite major indexes trading at record highs “on a mix of confidence from investors and friendly monetary policy from the Federal Reserve,” experts anticipate economic growth on a cautious sentiment among consumers.