Asian indices entered the new week with decreases

Asian markets entered the new week with decreases due to news flow from different countries regarding the coronavirus epidemic and fluctuations about inflation.

The MSCI Asia-Pacific index hit a one-week low. The negative divergence in Japanese and Hong Kong shares was remarkable. In China, the Shanghai Composite Index decreased, albeit limitedly.

The rally seen in the stocks last week stopped due to the evaluations of investors about how cost pressures will affect the economic recovery. Investors have also been closely watching the decisions on the withdrawal of incentives from some central banks in recent days.

Last week, the Bank of Canada kept the policy rate unchanged at 0.25%, while reducing its asset purchases to CAD 2 billion ($1.6 billion) a week.

The Reserve Bank of New Zealand said it would reduce fiscal stimulus. The Central Bank of New Zealand’s Monetary Policy Council kept the policy rate at 0.25%, while the title of the Large Scale Asset Purchase Program

under said that asset purchases will be stopped.

In the statement made by the council, it was mentioned that the council members stated that the risk of downward deflation and high unemployment fell into the background.

The course of bonds also creates a question mark

Investors are also trying to make sense of the downward trend in bond yields. For some investors, this trend is considered as a sign of disruption in the economic recovery due to the fact that the Delta variant forces countries to take new virus measures, while others believe that this rally is effective enough.

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