Asian Stock Market: China struggles to please bulls amid firmer yields, Omicron woes

Asia-Pacific shares dribble higher as China-linked headlines battle virus fears, firmer Treasury yields.
Aussie PM Morrison raises concern over Omicron response, China eyes record bonds issue in 2022.
Geopolitical concerns over Hong Kong, Iran join Evergrande updates to test advances.
Year-end positioning may entertain traders, US data is also eyed.

Anil Panchal FXStreet

Asian equities grind higher as optimistic headlines from China battle firmer Treasury yields and geopolitical news during a sluggish session on Thursday. That said, MSCI’s index of Asia-Pacific shares ex-Japan rises 0.10% while Japan’s Nikkei 225 drops by the same magnitude at the latest.

China shows readiness to keep the economy liquid via record bond issuance. The dragon nation also eyed foreign trade difficulties. “China plans to sell a record amount of treasury bonds in 2022, while keeping overall interest rates of the issuance lower, as Beijing adopts a proactive policy to stabilize economic growth, a senior official at the finance ministry said,” per Reuters. Alternatively, China’s Vice Commerce Minister said in a statement on Thursday, Beijing will face an unprecedented degree of difficulty next year in stabilizing foreign trade.

It’s worth noting that economic headlines from Beijing ignored looming fears of Evergrande’s default after Bloomberg reported that the due date to pay offshore coupons worth $255 million passed with no sign of payment by the embattled property developer. The payments have a 30-day grace period. That said, Evergrande dropped over 11%, drowning Hang Seng despite firmer gains in China.

Elsewhere, the record covid cases in multiple nations seem to push policymakers towards rethinking over the previous easing of activity restrictions during the holiday period. Recently, Australia Prime Minister (PM) Scott Morrison said, “Omicron indicates that Australia needs to reset its pandemic response.”

On a different page, geopolitical concerns also challenge the risk appetite as Reuters quotes US Secretary of State Antony Blinken said, “The US urges Chinese and Hong Kong authorities to release stand news staff members immediately.” Earlier in the day, Saudi Arabia’s King Salman bin Abdulaziz raised concerns over Iran’s lack of cooperation with the international community on its nuclear program and ballistic missile development.

Amid these plays, stocks in Australia reverse the early Asian gains while those from New Zealand print mild gains by the press time. Further, markets in South Korea and Indonesia also print mild losses while India’s BSE Sensex gains 0.15% by the press time. On a broader front, the US 10-year Treasury yields seesaw around 1.55% while the S&P 500 Futures print mild losses near 4,784.

It’s worth noting that Wall Street closed mixed the previous day even as DJI 30 refreshed all-time high. The reason could be linked to the strong US Treasury yields.

Read: US Treasury yields poke monthly top, S&P 500 Futures remain sluggish amid mixed sentiment

To sum up, global markets are consolidating ahead of the 2021 end amid a lack of major data/events.

Author

Anil Panchal

FXStreet

Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.

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