DM Monitoring
HONG KONG: Asian markets struggled Monday during holiday-hit trade, with investors looking forward to the Federal Reserve’s next meeting this week hoping for fresh clues about monetary policy in light of the US economy’s blistering recovery.
Another record close for the S&P 500 on Wall Street on Friday provided a healthy lead for the region, though with holidays in Hong Kong, China and Australia, business was light.
Confidence among investors remains high as vaccine rollouts, the easing of containment measures, central bank largesse and government stimulus provide support, with observers forecasting a rally that began in April 2020 will continue into next year.
US data showing inflation far higher than expected last month was taken in stride as markets appear to have accepted Fed insistence that the spike will be temporary and their ultra-loose monetary policies — including record low interest rates — will be maintained for the foreseeable future.
There had been a worry that soaring prices would force the bank to taper its bond-buying scheme earlier than first thought.
Still, this week’s meeting will be closely followed for an idea about its plans.
Mansoor Mohi-uddin, chief economist at the Bank of Singapore, said it is not expected to announce any change at the end of the gathering Wednesday, but it is “likely to start discussing when it will begin slowing its quantitative easing, given the US economy’s strong rebound from the pandemic”.
