Asian Stock Market: Bulls step back amid concerns over China, coronavirus
- Asian equity rally fizzles as covid woes join pre-Jackson Hole anxiety.
- Beijing’s crackdown on IT companies firm-up fears over China's economic recovery.
- BOK announces rate hike, US-China jitters renew but all eyes await Fed Chair Powell’s Jackson Hole showdown.
After a strong rebound during early week and a firmer Wall Street close, Asia–Pacific markets retreat during early Thursday and the reasons are obvious, namely covid and China. Also weighing on the sentiment could be the pre-data/event cautious mood.
That said, the MSCI index of Asia–Pacific shares outside Japan drops 0.80% on a day whereas Japan’s Nikkei 225 remains indecisive around 27,730 heading into Thursday’s European session.
Bloomberg came out with the analysis suggesting that China’s campaign to clamp down on industries ranging from steel to education to property has roiled financial markets and curbed the outlook for growth in the world’s second-largest economy. The same contradicts Reuters’ news saying, “A group of Wall Street figures and Chinese officials aiming to strengthen financial sector ties and bolster bilateral relations plans to hold a virtual meeting for the first time in a year.”
Elsewhere, Australia’s most populous state New South Wales recorded all-time high infections, coupled with New Zealand’s record daily covid cases. Figures from China are also higher than the previous ones and the West also marks a grim stand over the COVID-19. Additionally, fears of waning vaccine immunity in six months were also exerting downside pressure on the market sentiment by the press time.
Read: Coronavirus Update: Australia refreshes record infections, figures from NZ, China are up as well
Amid these plays, Australia’s ASX 200 drops 0.60% while New Zealand’s NZX 50 declines 1.2% at the latest. Stocks in China were down over 1.0% and Hong Kong’s Hang Seng joined the line with 1.49% daily losses.
It’s worth noting that South Korea’s KOSPI drops 0.60% as the Bank of Korea announced a 0.25% rate hike while Indonesia’s IDX Composite slumps 0.90% on a day.
On the contrary, India’s BSE Sensex prints mild gains amid hopes of government stimulus and rising house prices, as per Reuters’ poll.
Mildly offered S&P 500 Futures and a pause in the US 10-year Treasury yields upside, not to forget the US Dollar Index (DXY) rebound, also portray the risk-off mood.
Moving on, the US Personal Consumption Expenditure (PCE) Inflation data and second reading of the US Q2 GDP can offer intermediate direction to the markets but a cautious mood and COVID-19 fears, as well as China jitters, can keep the bears hopeful. Above all, Fed Chair Powell’s Jackson Hole showdown, up for Friday, is the key event of the week.