Asian Stocks Drop as We Reach 2022
ZFX - Asian stocks fell on Wednesday, following a mixed Wall Street session as investors prepared to position their portfolios for the new year and against the rising global number of Omicron coronavirus cases.
The MSCI index of Asia Pacific stocks outside Japan fell 0.3%, after six sessions of gains, following volatile US trade.
There was a loss in Hong Kong, down 0.99% and a loss by a decline in mainland technology shares, while China's leading stock fell 1.4%.
In China, the city of Xian entered its seventh day of lockdown on Wednesday after reporting 151 COVID-19 infections that were transmitted domestically with symptoms confirmed the previous day.
"The broader China market is still showing concerns over the uncertainty lockdowns and policies as there will be downsides to this," said Selina Sia, head of Greater China equity research at Credit Suisse (SIX:CSGN) Private Banking.
"However, more and more does it look to be easing as the measures of said policy are stated and carried out."
After reaching the month's high on Tuesday, Japan's Nikkei dropped 0.76% the following day.
But in Australia, the ASX 200 closed up 1.21% for the day despite the country's most populous state, New South Wales, announcing 11,201 cases of the new coronavirus.
It's common for the market to be volatile at the end of the year. Fund managers are going on holiday and this results in thinner trading volumes in certain key markets such as Australia.
"Usually, portfolio positions are being rethought and brought into the new year," said Jim McCafferty, co-head of APAC equity research at Nomura.
"Inflation is rising in Europe and the US, it's more restrained in Asia, so people are looking to position their portfolios to reduce inflation. In equities, people look at companies that can carry forward price increases in the future and companies with companies with dividend growth as one way investors can generate income."
The increase in the number of Omicron cases does not scare investors as much as they initially feared given that the death rate has not spiked and the prospects for a global lockdown remain slim.
"Investors are moving forward and seeing what the impact will be if it returns to normal," McCafferty said.
In early European trade, pan-regional Euro Stoxx 50 futures were down 0.14%, German DAX futures were down 0.18% and FTSE futures were up 0.58%.
US futures, the S&P 500 e-minis, rose 0.14%.
By Tuesday, the Dow Jones Industrial Average upped 0.26% on Tuesday. The S&P 500 hit a record intraday high during the session but weakened to end the day with 0.10%. The Nasdaq Composite lost 0.56%.
The yield on the standard 10-time Treasury note was at 1.4756% compared to the US close of 1.481% on Tuesday. Two-time yields, which rose by dealers' prospects from advanced Fed finances rates, hit 0.7402% after hitting0.758 in the former session, approaching a two-time high.
This, together with a more conservative mood for equities, helped slightly strengthen the bone. The bone indicator, which measures the note against six peers = USD, was at 96.19, over from a low of 95.958 on Friday.
US crude canvas was slightly advanced at$ per barrel. Brent crude canvas rose to $79.06 a barrel.
Gold was slightly lower at the spot price at $1,805.9 an ounce.
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