Asian markets hit as Delta, US data and China outweigh hope of recovery

Asian markets fell mainly on Thursday after a lukewarm advance on Wall Street as traders viewed mixed US data, concerns over the fast-spreading Delta variant and indications that the Federal Reserve could start to reverse its ultra-monetary policy. accommodating by the end of the year.

Adding to the selling pressure are fears that China has the online gaming industry in its sights, after a crackdown on its tech, private tuition and real estate industries last month sparked troubles.

News that more than 200 million people had now been infected with Covid-19 in just over 18 months highlighted the enormous battle governments are facing to bring the pandemic under control, with uneven deployment of vaccines sparking concerns about the global recovery.

The main headache now is the highly transmissible Delta strain, which is forcing some governments to reimpose closures or other containment measures, blurring the economic outlook.

Of major concern is the spike in cases in much of China, the world’s second-largest economy and the main engine of global growth, which some economists say could significantly hamper its annual growth.

U.S. officials said on Thursday that the spread of the mutation could have an effect on the job market.

Data from payroll service companies showed private hires in the United States in July stood at 330,000, the lowest since February, while they were also below half the previous month and well below expectations.

“The labor market recovery continues to show uneven progress, but progress nonetheless,” said Nela Richardson, chief economist of ADP.

“Hiring bottlenecks continue to hold back larger gains, especially in light of new concerns about Covid-19 related to viral variants.”

The numbers gave investors reason to anticipate Friday’s government jobs report, which some analysts had predicted to gain as much as one million jobs.

They also compensated for news that activity in the crucial US services sector hit an all-time high last month thanks to further business reopenings.

– The Beijing reticle –

Comments from Fed Vice President Richard Clarida hinted at the possibility that the US central bank would cut back its massive bond buying program and raise interest rates as early as 2023. The ultra-accommodative measures were a key factor in the recovery of world markets since their nadir in March 2020.

He said as the economy emerges from the pandemic, the reduction in the quantitative easing program could begin later this year, with analysts possibly tilting a decision in November.

The remarks come after a long-standing debate about the sharp spikes in inflation caused by reopening and people returning to their daily lives. And while Fed officials have widely said the spikes will be temporary, investors have long believed that policy should be tightened sooner than expected.

After a slight advance on Wall Street, where the S&P 500 hit a record high, Asia struggled.

Hong Kong led the losses after a report by the Chinese state-backed Securities Times said the government should end tax breaks for gaming companies as they have become global businesses.

“With the development of these software industries … the government no longer needs to continue providing support to the industry,” he said. “In this regard, the gaming industry must be mentally prepared.”

The comments were the latest threat to the multibillion-dollar industry, days after another spokesperson called online gaming “spiritual opium,” and added to concerns that the industry could be next in line. Beijing’s sights.

“China’s online gaming industry is part of the larger tech space, but it’s the second government spokesperson to tackle the industry this week, and you ignore the not-too-subtle warning to your friends. peril, ”said Jeffrey Halley of OANDA.

“From IPOs to technology to extracurricular education, the list of ‘targets’ seems to be growing every week.”

Hong Kong reversed the initial gains to sing in negative territory with Tencent, which was hammered by recent Beijing polls, losing more than three percent while Netease lost more than four percent.

There were also losses in Shanghai, Singapore, Seoul, Wellington, Taipei, Manila and Bangkok. Tokyo, Sydney, Mumbai and Jakarta have increased.

London and Frankfurt fell at the opening, but Paris rose slightly.

Oil prices continued Wednesday’s sharp declines, which came on fears about Chinese demand as it imposes lockdowns and after a surprise jump in US stocks.

The two main contracts have lost about a tenth of their value since reaching multi-year highs in early July.

– Key figures around 0720 GMT –

Tokyo – Nikkei 225: UP 0.5% at 27,728.12 (close)

Hong Kong – Hang Seng Index: DOWN 1.0% to 26,167.84

Shanghai – Composite: DOWN 0.3% to 3,466.55

London – FTSE 100: DOWN 0.3% to 7,099.67

Dollar / yen: UP to 109.66 yen from 109.48 yen at 21:00 GMT

Pound / dollar: up $ 1.3894 from $ 1.3891

Euro / dollar: DOWN to $ 1.1839 from $ 1.1841

Euro / pound: up to 85.22 pence against 85.21 pence

West Texas Intermediate: DOWN 0.2% to $ 68.01 per barrel

North Sea Brent: DOWN 0.3% to $ 70.16 per barrel

New York – Dow: DOWN 0.9% to 34,792.67 (close)

– Bloomberg News contributed to this story –

dan / axn

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