Asian Stock Market: Grinds higher as Omicron, China flash mixed signals

  • Asian equities trade mixed, mostly higher as market sentiment dwindles ahead of the key US inflation data.
  • Fresh fears over covid variant join Evergrande-linked woes to favor bears, stimulus hopes, vaccine news keep buyers hopeful.
  • China CPI jumped the most since August 2020, PPI eased from 26-year high in November.
  • Sino-American tussles, US-Iran tension also poke upside momentum.

Asian equities remain mostly firmer as stimulus hopes battle virus woes heading into Thursday’s European session. To portray the mood, the MSCI’s index of Asia-Pacific shares outside Japan jumps 0.81% but Japan’s Nikkei 225 drops 0.15% at the latest.

Return of the virus-led activity restrictions in Germany, France and the UK renews COVID-19 fears. However, headlines from leading covid vaccine producers signal the effectiveness of booster shots to tame the South African coronavirus variant, dubbed as Omicron.

Elsewhere, China’s Consumer Price Index (CPI) jumped the most since August 2020, by 2.3% YoY and 0.4% MoM in November. Further, the Producer Price Index (PPI) crossed 12.6% forecasts to arrive at 12.9% YoY in November. Further, the People’s Bank of China (PBOC) raised the Yuan mid-point to the highest in 3.5 years, to 6.3498 yuan per dollar, to battle the challenges at home.

Among the key issues worrying China are the geopolitical tussles with the US and fears of default emanating from Evergrande and Kaisa are the major ones. Recently, US Assistant Secretary of Defense for Indo-Pacific Security Affairs Ely Ratner said, “Bolstering Taiwan's self-defenses is an ‘urgent task’ and an essential feature of deterring China”.

Amid these plays, stocks in China and Hong Kong remain positive but not Australian equities. Further, New Zealand’s NZX 50 drops around 1.5% by the press time. It’s worth noting that South Korea’s KOSPI and Indonesia’s IDX Composite print mild gains whereas India’s BSE Sensex drops 0.15% even after the Reserve Bank of India (RBI) kept monetary policy unchanged the previous day.

On a broader front, fresh fears of the Fed rate hike propel the US Treasury yields and weigh on the stock futures. However, oil prices remain firmer on concerns relating to Ukraine and Iran.

Looking forward, market players will remain at loggerheads and could witness a lack of major moves ahead of the key US inflation data, up for publishing on Friday.

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