Asian shares decline with global energy shortage inciting inflation fears

Asian shares fell as the dollar stood ground on Tuesday as a global energy shortage instigate fears of inflation, making the waters murky for investor sentiment prior to the U.S. corporate earnings season.

MSCI’s broadest index of Asia-Pacific shares outside Japan dropped by 0.9% in preliminary trade post the mild losses the U.S. Stocks incurred in the previous session. The U.S. stock futures, the S&P 500 e-minis, declined by 0.43%.

Australian shares dropped by 0.29% as Japan’s Nikkei stock index went down by 1.03%.

China’s blue-chip index slipped 0.75% and Hong Kong’s Seng index opened at a decline of 1.35%.

In a statement made by ANZ analysts, they went on record to say:

“Risk markets had a mixed start to the week amid light data flow and ahead of the US earnings season,”

Further, they said:

“Economies appear to be entering a more challenging phase of the cycle and we think investors and corporates will be monitoring how the economic data and earnings results fall before making assessments of near term direction.”

Looking at investor sentiment, Reuters reported that some of China Evergrande Group’s offshore bondholders have not been given interest payment which had been committed on Monday. Meanwhile, Rivals Modern Land and Sinic are the most recent developers who had been clambering to delay the deadline on bond payments.

Evergrande’s troubles and fears of contagion have impacted the global markets in the previous months, with the firm already missing payments on dollar bonds that had already totaled $131 million, supposedly due on Sept 23rd and Sept 29th.

Wall Street had ended a choppy session on Monday with its main indexes as investor worries grow ahead of third-quarter earnings reporting season.

Basic material and energy shares rallied on higher oil prices, lifting major U.S. stock indices. However, gains faded against a backdrop of concerns about earnings to be seen through JPMorgan Chase & Co.’s results on Wednesday. Analysts are on the prowl with a forecast that some companies would be lodging reports of slowing growth due to supply-chain hurdles and climbing prices. This, analysts contend, could lead to a decline in U.S. stocks.

JP Mrgan shares were dropped by 2.1% while S&P 500 lost 0.69%, bringing figures down to 4,361.19, admittedly one of the biggest drops in the market.

The Dow Jones Industrial Average also experienced a decline of 0.72% to 34,496.06, as the Nasdaq Composite slipped 0.64% to end at 14,486.20.

With weaker jobs growth in September reported by U.S. data, attention shifted to inflation and retail sales numbers this week. The Federal Reserve is also expected to begin tightening policy through the announcement of a tapering of massive bond-buying in the coming month.

The possibility of accelerating inflation and the tightening of monetary policy helped bond yields.