HONG KONG, Nov 22 — Asian stock markets mostly recouped early losses today, supported by improved sentiment for China shares, but concerns lingered that Beijing may reimpose strict Covid curbs that could cause supply chain disruptions.
The dollar pulled back from strong overnight gains while oil took a pause from yesterday’s retreat.
European stock futures indicated a sluggish open with Eurostoxx 50 futures up 0.15 per cent, German DAX futures up 0.09 per cent and FTSE futures FFIc1 up 0.30 per cent
The broad Asia-Pacific index ex-Japan recovered earlier losses to inch 0.07 per cent higher in the afternoon.
The biggest driver for the recovery was China, with its benchmark up 0.43 per cent. Losses on Hong Kong’s benchmark index narrowed to 0.7 per cent.
Support came from the property sub-sector, as fresh government moves dished out late yesterday to aid the struggling industry helped buoyant sentiment.
China’s central bank said late yesterday it will provide 200 billion yuan (US$28 billion) in loans to six commercial banks for housing completions.
Gains in China were capped by worsening Covid-19 situation in the country, however.
The fact China has showed movement away from on zero Covid is “very significant” but it has been drowned out by the latest new on resurgence of cases in Beijing, said Ray Attrill, head of FX strategy, National Australia Bank.
The Chinese capital warned yesterday it was facing its most severe test of the pandemic, fuelling investor concerns that China may be forced to resume strict mobility curbs and issue stay at home orders across cities.
Surging cases in manufacturing cities may cause supply chain disruptions, said Redmond Wong, market strategist for Greater China at Saxo Markets in Hong Kong.
Japan’s benchmark Nikkei average rose 0.69 per cent, as the yen’s weakness against the dollar raised prospects for domestic manufacturers.
Australian shares rose 0.59 per cent, supported by strength in miners and banks.
The dollar pared some of its strong overnight gains today after investors flocked to the safe-haven currency on nerves over China’s Covid flare ups, but analysts at the National Australia Bank questioned whether demand for the greenback was sustainable.
“Evidence US inflation has peaked and can fall significantly in 2023, together with China and Europe developments, convince us a USD depreciation cycle is now in train,” they said in a note today.
US Treasury yields across most maturities rose today amid expectations of further Federal Reserve interest rate hikes, as the market awaits latest Fed minutes due to be released tomorrow to provide greater clarity.
The benchmark 10-year Treasury yield US10YT=RR rose five basis points.
Oil prices rose today, a day after Saudi Arabia denied a media report that it was discussing an increase in oil supply with Opec and its allies.
US crude extended gains from early trades to rise 0.36 per cent to US$80.33 per barrel and Brent was at US$87.88, up 0.49 per cent.
Spot gold up 0.3 per cent to trade at US$1,742.91 an ounce. — Reuters
