Asian Stock Market: China fails to impress bulls amid Fed concerns

Asian equities drift lower even as PBOC announced another rate cut.
Firmer yields, upbeat US stock futures trouble investors amid softer start to the key week.
Fears of Russian invasion of Ukraine, wider quasi emergency in Japan also weigh on the sentiment.

Asian equities fail to justify China’s aggressive easing as most markets print losses during early Monday. The reason could be linked to the pre-Fed caution and challenges to the risk appetite emanating from Russia-Ukraine tussles.

That said, the MSCI’s index of Asia-Pacific stocks ex-Japan drops 0.80% whereas Japan’s Nikkei 225 recovers early Asian losses, up 0.20% intraday heading into the European session.

Policymakers in Japan brace for taking more prefectures under quasi-emergency status as covid infections jump to record high during weekends. Even so, a jump in Japan’s Jibun Bank Manufacturing PMI to a four-year high seems to underpin the latest optimism.

Elsewhere, Australia’s Commonwealth Bank PMIs came in mixed and the virus infections also seem to ease of late. Even so, Australia’s ASX 200 drops 0.50% at the latest whereas New Zealand’s NZX 50 drops over 1.0% as the Pacific nation moves ‘red’ alert level for activity restrictions.

On a different page, the People’s Bank of China (PBOC) announced 10 basis points (bps) of a rate cut, the second in nearly a week, to defend the world’s second-largest economy from covid and financial risks. However, markets in China and Hong Kong trade mixed with Hang Seng down 1.0%. Further, shares in Indonesia, South Korea and Indian print losses amid firmer US Treasury yields.

That said, the US 10-year Treasury yields rose two bps to 1.767% by the press time while stock futures in the US and Europe begin the crucial week on a positive.

Moving on, preliminary PMIs for January could entertain intraday traders but major attention will be given to Wednesday’s Federal Open Market Committee (FOMC).

Read: Fed Preview: Three ways Powell could out-dove markets, dealing a blow to the dollar

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