Mixed trading on Asian bourses
ASIAN shares were mixed on Monday as sentiment was shaken by the US Federal Reserve’s announcement that it would end some emergency measures put in place last year to help the financial industry deal with the pandemic.
image for illustrative purpose
Tokyo: ASIAN shares were mixed on Monday as sentiment was shaken by the US Federal Reserve's announcement that it would end some emergency measures put in place last year to help the financial industry deal with the pandemic. Meanwhile, the Turkish lira nosedived early Monday, falling about 17 per cent, after the country's president, Recep Tayyip Erdogan, removed central bank head Naci Agbal from his post on Saturday.
The currency was trading at about 7.8 lira to the dollar on Monday morning. Agbal had been struggling to counter inflation by raising interest rates, while Erdogan contended that raising interest rates would contribute to inflation - contrary to economic experience and theory, Jeffrey Halley of Oanda said in a commentary.
He replaced Agbal with a banking professor who has argued for lower interest rates. The central bank had said tight monetary policy would be maintained until inflation, which has hit 15.61 per cent was brought under control. An increase in the key interest rate by 200 basis points to 19 per cent last week had pushed the lira higher.
"Turkey will be an interesting example of what emerging markets can expect if inflation fears rise markedly," Halley said.
In Asian trading, Japan's benchmark Nikkei 225 dropped 2.1 per cent in afternoon trading to 29,174.15. South Korea's Kospi lost 0.1 per cent to 3,035.46. Australia's S&P and ASX 200 gained 0.7 per cent to 6,752.50.
Hong Kong's Hang Seng shed 0.2 per cent to 29,941.21, while the Shanghai Composite jumped 1.1 per cent to 3,443.44. Major Japanese stocks fell nearly across the board, including automakers like Toyota Motor and Honda Motor, whose earnings get a boost from a healthy US economy. Toyota's shares fell 3.3 per cent while Honda's lost 3.6 per cent.
"Asia markets had seen a mixed commencement to the week with the rising bond yields once again weighing on sentiment. The see-sawing of the influence between rising bond yields and improving economic recovery prospect may well remain for the region going into the end of March," said Jingyi Pan, senior market strategist at IG in Singapore.
The move last week by the Fed will restore some of the capital requirements for big banks that were suspended in the early months of the viral outbreak, in order to give banks flexibility.
The banking industry had hoped those measures would be extended. But most of the Fed's policies aimed at supporting the recovery from the pandemic remain intact. Worries about the coronavirus pandemic remain in the region, where vaccine rollouts in some nations such as Japan and Thailand are progressing slowly compared to the US or Europe.
