Asian stocks grind lower as Omicron, Fed-linked fears sour sentiment

Asian equity markets remain pressured as Omicron woes join cautious mood ahead of the key central bank meeting.
Japan braces for huge liquidity injection, China’s Shimao Group adds to the financial market risks.
ADB slashes growth forecasts for developing Asia economies.

Anil Panchal FXStreet

Risks dwindle during early Tuesday in Europe, also inflicting losses to Asia-Pacific markets, as the COVID-19 variant spreads faster outside the origins of late. Adding to the risk-off mood was the market’s anxiety over the next moves of critical central bank decisions scheduled for Wednesday and Thursday, including the US Federal Reserve (Fed) and the European Central Bank (ECB).

To portray the mood, MSCI’s index of Asia ex-Japan shares drops around 1.0% whereas Japan’s Nikkei 225 also marked 0.85% loss by the press time even as the Bank of Japan (BOJ) offers huge liquidity injection to defend rates.

Following the UK’s first Omicron-linked death and return of the mask mandate in California, Australia’s largest state, population-wise, New South Wales (NSW) reports the highest daily virus infections tally in more than two months. The virus woes pushed the finance ministers and central bank governors of the Group of Seven (G7) nations to pledge more efforts to combat the pandemic. Additionally, the Asian Development Bank (ADB) cut growth forecasts for developing Asia due to the same reason, per Reuters.

The ADB cuts the economic forecast for China by 0.1% and 0.2% for 2021 and 2022 and drags the Beijing-based shares. Also weighing on the Chinese equities are the market fears that Hong Kong-listed Shimao Group. “Chinese property stocks sank for a third day, heading for the lowest level since early 2017, after a deal between units of Shimao Group Holdings Ltd. heightened governance concerns in an industry already grappling with a liquidity squeeze,” said Bloomberg.

Elsewhere, Australia’s largest state, population-wise, New South Wales (NSW) reports the highest daily virus infections tally in more than two months and weigh on the Aussie and Kiwi stocks. Markets in South Korea and India follow the trend while those from Indonesia print mild gains despite earth-quake and Tsunami threats.

On a broader front, the US 10-year Treasury yields seesaw around 1.42% whereas the S&P 500 Futures rise 0.15% at the latest.

As the economic calendar turn active from Wednesday, investors may remain cautious ahead of that. However, the virus updates and other risk catalysts may challenge the optimists.

Read: Yields test weekly low, S&P 500 Futures print mild gains amid coronavirus, Fed concerns

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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