By Gina Lee
Investing.com – Asia Pacific stocks were mixed on Monday morning. However, parts of Europe implemented restrictive measures to curb the continent’s latest COVID-19 outbreak, and investors are also calculating the risk that the U.S. Federal Reserve will speed up asset tapering.
Japan’s Nikkei 225 was down 0.30% by 9:13 PM ET (2:13 AM GMT). South Korea’s KOSPI jumped 1.07%, with the Bank of Korea due to hand down its policy decision on Thursday.
In Australia, the ASX 200 was down 0.50% while Hong Kong’s Hang Seng Index inched down 0.10%.
China’s Shanghai Composite was up 0.41% while the Shenzhen Component was gained 0.53%, with the People’s Bank of China (PBOC) keeping its one-year loan prime rate unchanged at 3.85% earlier in the day. The yuan also remains in focus after PBOC advisor Liu Shijin warned that the Chinese economy could enter a period of “quasi-stagflation” at Sunday’s China Macroeconomy Forum.
Soaring numbers of COVID-19 cases in Europe forced Austria into a full lockdown starting on Monday and Germany to tighten restrictive measures.
U.S. Treasuries trimmed a rally, with the gap between yields on five-year and 30-year maturities near the lowest since March 2020, over concerns that the Fed could accelerate the drawdown of its bond-buying program.
Fed Vice Chairman Richard Clarida, Governor Christopher Waller, and St. Louis Fed President James Bullard have all indicated that speeding up the pace of asset tapering could be discussed at the central bank’s next meeting in December.
“What we are likely to see this week is more Fed members socializing that idea of a more rapid QE taper,” Prestige Economics president and chief economist Jason Schenker told Bloomberg.
“If that idea gets out there and is repeatedly underscored, that will increase the probability that the tapering that’s announced in December will be quicker than the pace that was announced early in November,” he added
Despite worries over the rising number of COVID-19 cases as winter begins in the northern hemisphere, and high inflation prompting central banks to tighten monetary policy, global shares remain near record levels overall.
On the data front, the U.S. and the eurozone will release their purchasing managers’ indexes on Tuesday. Further data from the U.S., including the Fed minutes from its latest meeting, GDP, and initial jobless claims, will be released on Wednesday ahead of Thursday’s Thanksgiving holiday.