Asian stocks dribble amid cautious optimism

Asian shares fail to portray a clear trend during early Tuesday as political turmoil in the US battles hopes of fiscal stimulus and expectations of economic recovery amid a lack of major data/events. That said, MSCI’s index of Asia-Pacific shares outside Japan drops 0.20% whereas Japan’s Nikkei 225 rises 0.10% as Tokyo returns from the extended weekend.

It should be noted that Japan’s Kyodo News cited calls for emergencies in three more states, namely Osaka, Kyoto and Hyogo prefectures, based on the jump in the virus infection and weigh on the market sentiment. On the same line, Malaysian markets are also red as their King announced virus-led emergencies lasting till August 2021.

Further, Australia’s ASX 200 wavers around 6,700 while New Zealand’s NZX 50 drops 1.2% as New Zealand tightens the coronavirus (COVID-19) testing for new arrivals except for Australia and some Pacific islands.

Indonesia’s IDX prints mild gains despite downbeat Retail Sales at home whereas South Korea’s KOSPI drops over 1.5% amid virus woes while tracking the Wall Street benchmarks to the south. Additionally, Chinese equities remain positive as authorities confirmed the arrival of the World Health Organization’s (WHO) policymakers for the covid tracing investigations. Also on the positive side could be hopes of strong economic recovery in the second half of 2021 conveyed by the US Federal Reserve policymakers.

Against this backdrop, S&P 500 Futures tease the 3,700 round-figure but the US 10-year Treasury yields stay on the front foot above 1.00%, currently around 1.15%. As a result, the US dollar index (DXY) looks for fresh clues to extend the three-day uptrend beyond a three-week high flashed the previous day.

Considering the light calendar ahead, markets will keep eyes on the US political headlines and news concerning the aid package, not to forget the virus updates, for fresh impetus.