Asian Stock Market: Drifts lower as stimulus hopes battle Evergrande woes

  • Asian shares trade mixed, mostly lower, as Fed, Evergrande-linked fears combat hopes of easy money, Omicron cure.
  • PBOC ready for RRR cut, RBA is likely announcing status-quo whereas Japan braces for record fiscal stimulus.
  • US jobs data fails to tame Fed hawks, US inflation eyed.
  • US Treasury yields, stock futures consolidate recent losses amid quiet week-start.

Asia equities fail to track the US and European stock futures during sluggish Monday morning as fears from China’s Evergrande and Fed rate hike woes jostle with hopes of cure to the South African covid variant and stimulus chatters.

That said, the MSCI’s index of Asia-Pacific shares outside Japan drops 0.60% but Japan’s Nikkei 225 marks 0.37% intraday loss heading into the European session.

China’s struggling real-estate firm Evergrande is again in the news as it approaches the deadline for a $82.5 million payment. Ahead of Monday’s day-end deadline, Evergrande said, per Reuters, that it could not guarantee enough funds for coupon repayment. Following that, ANZ said, “China’s Premier Keqiang promised a Reserve Requirement Ratio (RRR) cut to the International Monetary Fund (IMF), without specifying the date, – on the same day Evergrande filed a warning of default risk and possible restructuring.”

The same challenges market sentiment as Hong Kong’s Hang Seng drops over 1.0%, drowned by a 12% slump to the lowest since 2010 by shares of the Evergrande Group. However, Chinese equities tread water, mildly bid of late, whereas those from South Korea copy the moves.

That said, Australia’s ASX 200 struggles to justify by Treasurer Josh Frydenberg’s optimism ahead of tomorrow’s RBA meeting while NZX 50 drops 0.90% amid firmer Treasury yields and fresh covid woes at home.

Moving on, South Korea’s KOSPI and Indonesia’s IDX Composite stay mildly bid but India’s BSE Sensex drops 0.40% amid a jump in the Omicron cases in India during the weekend.

On a broader front, S&P 500 Futures rise 0.45% intraday and the US 10-year Treasury yields gain four basis points (bps) to 1.38% by the press time. It’s worth noting that the Wall Street benchmarks closed negative while the US 10-year Treasury yields dropped around 10 basis points (bps) to 1.35%, the lowest since late September, the previous day. The recent consolidation in the market also takes clues from hopes of finding a cure to the South African covid variant, dubbed as Omicron, as well as chatters that the COVID-19 variant is less dangerous than initially feared.

Moving on, updates over Japan’s covid stimulus, Evergrande and Omicron may entertain traders amid a light calendar day.

Read: Yields, S&P 500 Futures lick wounds amid sluggish session, coronavirus eyed

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