Anshuman Daaga

SINGAPORE, (Reuters) – Asian shares lost a lot on Tuesday due to a wide sell-off in Wall Street. Markets worried about the effects of high multi-year oil prices and supply chain disruptions that are already putting stress on economic activity.

The MSCI’s Asia-Pacific broadest index, which excludes Japan, fell by as much as 1.3% for the third consecutive session. Japan stock fell 2.8% while South Korea lost 2.5%, and Australia lost 1%. Vasu Menon is the executive director for investment strategy of OCBC Bank. “Investors are clearly concerned about inflation due supply chain disruptions, and the rally in oil prices,” he said. MSCI’s primary benchmark fell to 619.87 in the wake of this drop, its lowest point since November 2020. The MSCI has lost more than 5% in 2018, with the biggest losers being Japanese and Hong Kong markets.

Menon stated that tech stocks have outperformed value stocks. If inflation is a concern, tech stocks can be hit.

Oil prices reached three-year peak on Monday after OPEC+ confirmed it would stick to its current output policy https://www.reuters.com/business/energy/opec-seen-keeping-oil-output-policy-unchanged-opec-sources-say-2021-10-04 as demand for petroleum products rebounds, despite pressure from some countries for a bigger boost to production. [O/R]After reaching a record high of $77.60 per barrel in 2014, it was stable at $81.30 a day. It had previously risen to an all-time high over three years. Market focus in Asia will be on whether embattled property developer China Evergrande https://www.reuters.com/business/china-evergrande-share-trading-halted-hong-kong-2021-10-04 offers any respite to investors looking for signs of asset disposals. On Monday, shares in the company were stopped for trading.

As rising Treasury yields led to investors selling off Big Tech stocks, the Dow fell by 0.94% at 34,002.92, and it lost 1.30% at 4,300.46. The Dow dropped 2.14% on the day to 14,255.49

U.S. Treasury yields increased on concerns by investors about raising the debt ceiling to protect the country from a possible historic default within two weeks. The U.S. Senate was poised to vote in late Wall Street trading to pass a bill in the House of Representatives to extend the U.S. borrowing limit through December 2022. This would end the one-year old congressional deadlock which has been causing concern for investors. Prior to key U.S. payrolls data that is due by the end of this week, the U.S. Dollar traded close to a 1-year high against major peers. This could provide clues about the timing of tapering Federal Reserve stimulus and when interest rates will rise. The index, which measures the greenback against a basket six currencies, edged higher by 0.9% to 93.928. While the euro dropped 0.13% at $1.1605, the exchange rate of the yen was 0.12% higher at $111. After rising Monday, gold prices hovered in tight range at $1,763 an ounce. This was the highest level since Sept. 23, when they reached their highest point. [GOL/]