Asian Markets Mixed as Investors Watch on Oil Price Rally

Asia-Pacific markets traded mostly higher Monday but investors remained cautious over a resurgence in Covid-19 cases in some parts of the region as well as potential inflation pressures in the U.S.

In Japan, the Nikkei 225 rose 0.17% to 28,364.61, trimming some of its earlier gains. The Topix index added 0.44% to 1,913.04.

Singapore’s Straits Times Index rose 0.2% in afternoon trade while India’s Nifty 50 and Sensex added 0.23% and 0.26%, respectively. The Malaysian benchmark index was up about 0.53% while Taiwan’s Taiex rose 0.22% to 16,338.29.

Chinese mainland shares reversed earlier losses: The Shanghai composite rose 0.31% to 3,497.28 while the Shenzhen component added 0.62% to 14,506.61.

Australia’s ASX 200 advanced 0.22% to 7,045.90 as major miners came under pressure. Shares of Rio Tinto fell 2.15%, Fortescue was down 4.17% while BHP declined 1.84%.

In South Korea, Kospi index fell 0.38% to 3,144.30 and Hong Kong’s Hang Seng index was down 0.26% as of the final hour of trading.

The session follows after last week the Dow Jones Industrial Average and the S&P 500 stateside posted their fourth and second consecutive negative week of losses.

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Last week, data showed strong comeback by the services sector both in the U.S. and Europe as businesses reopened following prolonged lockdown and benefited from a global demand recovery.

“The debate in financial markets is now not so much about how quickly GDP can recover but rather the shape of recoveries,” wrote analysts at ANZ Research in a morning note. They explained it will take time to answer questions around inflation, but expect the U.S. Federal Reserve to guide the market appropriately.

“We see little prospect that Fed speakers will change recent guidance that price increases are transitory, but that the Fed will respond appropriately if not,” the analysts wrote.

Asian Markets Currencies and oil

In the currency market, the U.S. dollar traded around 89.939 against a basket of its peers, hovering near the 90.00 level.

Among the major currency pairs, the Japanese yen changed hands at 108.69, strengthening from levels near 108.99 earlier in the session. The Australian dollar traded at $0.7741, climbing 0.1% from its previous close.

Oil prices rose Monday during Asian trading hours. U.S. crude was up 1.16% at $64.32 a barrel while global benchmark Brent was up 1.11% to $67.18.

Last week, both contracts registered weekly losses amid concerns of more Iranian oil hitting the market. Iran’s president reportedly said the U.S. was ready to lift sanctions on his country’s oil, banking and shipping sectors.

“Iran’s oil production has been rising in recent months, likely in anticipation of a lifting of the sanctions,” said the ANZ Research analysts in their note. “The market is also concerned about the impact of new restrictions in Asia as authorities try to contain a new outbreak of coronavirus.”

Still, investors in Asia appear to be upbeat about fuel demand recovery in the U.S. and Europe as countries emerge from lockdowns and more vaccinated individuals plan their travels over the summer.