- Asian markets were mixed Monday as optimism about the global recovery was offset by concerns about a spike in new infections in several countries.
- Wall Street provided another strong lead after data showed US retail sales were flat last month, which helped ease traders' fears that a surge in inflation could force the Federal Reserve to wind back its monetary policies.
- Focus this week is on the release of minutes from the Fed's latest policy meeting at the end of last month, which will be pored over for an idea about members' views on inflation.
Asian markets were mixed Monday as optimism about the global recovery was offset by concerns about a spike in new infections in several countries that have officials battling to avert new lockdowns.
Wall Street provided another strong lead after data showed US retail sales were flat last month, which helped ease traders' fears that a surge in inflation could force the Federal Reserve to wind back its ultra-loose monetary policies sooner than expected.
However, a fall in consumer confidence owing to rising prices indicated the issue was unlikely to go away any time soon, and analysts said central bank officials had to tread a fine line between getting the economy back on its feet and keeping inflation under control.
"On the one side, we have the Fed's view, apparently embraced by equity investors, implying there is nothing to see here, given that base effects and reopening dynamics mean we should expect volatility in the data and no one said reopening was going to be cheap," said National Australia Bank's Rodrigo Catril.
"On the other side of the argument is rising concerns that inflation is becoming unanchored with a decline in consumer sentiment a reflection of the negative impact inflation is having on disposable income. So at what point does higher inflation become problematic for policy?"
Focus this week is on the release of minutes from the Fed's latest policy meeting at the end of last month, which will be pored over for an idea about members' views on inflation in light of surging commodity prices, supply bottlenecks and economic reopenings.
"Record highs in copper prices and fears over extended oil price gains will be hard to ignore" heading into the second half of the year, said Eric Robertsen at Standard Chartered. "The Fed believes this is part of the economic reopening narrative" and will hold off making any moves now, he added. "But it might start looking over its shoulder if prices stay high."
Musk hits bitcoin
Hong Kong, Shanghai, Sydney and Wellington all rose.
However, Tokyo, Singapore and Taipei were all sharply lower as their respective governments struggle to contain new cases of coronavirus.
The rise in infections has forced Taiwan to order stricter social distancing measures for the capital and surrounding areas, while Japan extended a state of emergency as calls grow for the Olympics to be scrapped.
And in Singapore, most in-school classes have been scrapped while an already once-delayed travel bubble planned for this month with Hong Kong could be put off again owing to a sharp pick-up in infections in the city.
Bitcoin fell below $45 000 for the first time in almost three months after Elon Musk on Sunday appeared to suggest his Tesla carmaker may sell - or already had sold - its holdings in the cryptocurrency.
The billionaire roiled the market after he replied "Indeed" to a tweet from a person that said: "Bitcoiners are going to slap themselves next quarter when they find out Tesla dumped the rest of their #Bitcoin holdings. With the amount of hate @elonmusk is getting, I wouldn't blame him..."
Tesla had already hammered the digital currency last week when it said it will halt transactions in the cryptocurrency because of environmental concerns.
In company news, Hong Kong's largest pro-democracy media group suspended trading in its shares Monday, two days after authorities froze the assets of its jailed owner Jimmy Lai under a new national security law.
Next Digital Limited - which publishes the Apple Daily newspaper - said it would halt trading "pending the release of an announcement" about Lai's frozen assets, in a statement to the city's stock exchange.