Market news

22 December 2021

Asian Stock Market: Cautious optimism prevails ahead of US data

  • Asian-Pacific equities grind higher as US Treasury yields retreat, Omicron fears fade.
  • Australia unveiled battle plan amid record jabbing, UK, US ruled out the need for a complete lockdown.
  • Vaccine hopes, expectations of US stimulus add to the upbeat sentiment.
  • US data, rising inflation expectations challenge bulls.

Asian markets remain mildly bid during early Wednesday, tracking Wall Street gains, even as cautious mood ahead of the US data tests the bulls. While portraying the mood, MSCI’s index of Asia-Pacific shares outside Japan rises 0.50% whereas Japan’s Nikkei 225 gains 0.15% intraday at the latest.

Minutes of the latest BOJ meeting showed that the policymakers discussed the weak yen and its benefits for the economy. The Minutes also said that the board backed the need for easy money amid a sustained miss of the 2.0% inflation target.

Elsewhere, China’s National Development and Reform Commission (NDRC) released a 10-point strategy to support the world’s second-largest economy. However, thin liquidity and likely short-covering in the tech shares probed bulls to dominate further. That said, stocks in China trade mixed by the press time.

On a different page, Australia’s snap cabinet meeting released mask mandates and vaccine guide as the nation praises the highest jabbing rate in the world. This baffles Aussie equity traders and marks no major moves of the ASX 200. On the contrary, New Zealand’s NZX 50 rises 0.25% at the latest.

It’s worth noting that stocks in Indonesia, South Korea and India tracked Wall Street’s gains amid hopes of a cure to the Omicron. Bloomberg news that the US Food and Drug Administration (FDA) is up for authorizing a pair of pills from Pfizer and Merck to treat Covid-19 as soon as this week favored risk-on mood. On the same line were the updates from the Defense One suggesting, “US army creates single vaccine effective against all covid, sars variants.” Also positive for the sentiment was US President Joe Biden’s push for more vaccinations and cautious optimism during the national address. The US leader also said, per The Hill, “I think there is still a possibility that his Build Back Better (BBB) agenda can get done, despite Sen. Joe Manchin’s opposition of the climate and social spending bill.”

That said, the US 10-year Treasury yields dropped two basis points (bps) to 1.465% whereas the S&P 500 Futures decline 0.20% intraday even as the Wall Street benchmarks snapped a three-day downtrend.

Looking forward, the final reading of the US Q3 GDP and the CB Consumer Confidence for December will be crucial for markets amid recently improving US inflation expectations, per the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data.

Read: Conference Board Consumer Confidence December Preview: Where do Americans turn for optimism?

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