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Most Asian stocks see a rise after Wall St. record

Health corporate earnings overshadow inflation concerns

By AFP - Oct 26,2021 - Last updated at Oct 26,2021

A pedestrian walks past an electronic quotation board displaying the closing share prices of the Tokyo Stock Exchange (left) and the yen rate against US dollar (right) in Tokyo on Tuesday (AFP photo)

HONG KONG — Asian markets mostly rose on Tuesday following fresh records on Wall Street, with healthy corporate earnings overshadowing ongoing concerns about inflation, while progress in Washington on Joe Biden's big-spending economic plans also provided support.

However, a fresh virus outbreak in China, where more than four million have now been put into lockdown, revived concerns about the world's number two economy and authorities' zero-COVID policies.

The S&P 500 and Dow both ended at new peaks, with tech firms lifted by a surge in electric car maker Tesla to the trillion-dollar mark ahead of the release of profit reports this week from business titans including Apple, Amazon, Microsoft and Twitter.

Facebook became the latest firm to unveil bumper earnings, posting a $9 billion profit in the third quarter and reinforcing optimism on trading floors following a string of reports that have seen upbeat commentary on consumer demand.

Tokyo led gains, piling on 1.8 per cent, helped by reports that Japan's ruling Liberal Democratic Party will likely win a majority in the upcoming general election.

Sydney, Singapore, Seoul, Taipei, Manila, Mumbai, Bangkok and Jakarta also rose.

Hong Kong and Shanghai dropped following news that developer Modern Land had missed a bond payment in the latest sign of stress in China's property sector, with focus on an upcoming deadline for China Evergrande.

Reports that Evergrande had met obligations on a note at the end of last week, just before a Saturday cut-off, boosted sentiment but with several more to go before the year's end, there is a feeling the inevitable default is merely being delayed.

OANDA's Jeffrey Halley raised concerns about the possible impact of the latest Delta outbreak in China, with fears over fresh lockdowns as the country follows its zero-COVID strategy.

On Tuesday, officials put the city of Lanzhou, with a population of four million, under lockdown, with residents told not to leave home except in emergencies.

"The arrival of Delta in COVID-zero countries in other parts of the world suggests challenges ahead, even for China," he said in a note. "If it spreads rapidly, some severe lockdowns could follow. That would complicate an already nightmarish scenario for global supply chains under stress."

 

Biden spending plans 

 

Developments in Washington are being closely followed after Biden said on Monday he hoped Democrats would strike a deal on two massive spending packages this week.

Both wings of his party have for weeks been haggling over a social spending bill expected to cost a little less than $2 trillion and an infrastructure bill worth $1.2 trillion.

He said talks with one of the main obstacles to agreement, moderate Democratic Senator Joe Manchin, "went well". But there is concern that progressives in the House of Representatives who want more spending could now pose a threat to the plan.

House Budget Chairman John Yarmuth warned the chances of getting a framework together by the end of the week — when Biden heads off for European summits — were slim, saying: "I wouldn't bet my grandson on that."

The European Central Bank holds its latest policy meeting on Thursday, with traders looking for an idea about its plans for monetary policy in light of surging global inflation.

The gathering comes as financial chiefs around the world begin to remove the ultra-loose measures put in place at the start of the pandemic, with the Bank of England tipped to lift interest rates this year, following moves by South Korea and New Zealand among others.

The Federal Reserve (Fed) has said it will begin winding down its bond-buying programme within the next two months, and some observers have forecast that could come as soon as November. Meanwhile, there is a growing expectation the Fed will raise borrowing costs in mid-2022.

There was little reaction to news that China's Vice Premier Liu He held "pragmatic, candid and constructive exchanges" in a virtual call with US Treasury Secretary Janet Yellen to discuss trade issues, with both sides highlighting points of concern in their relationship.

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