Asian stocks are ticking, but Omicron concerns are pushing markets to the brink

A man wearing a protective face mask, following an outbreak of the coronavirus, speaks on his mobile phone in front of a screen showing the Nikkei index outside a brokerage house in Tokyo, Japan, February 26, 2020. REUTERS / Athit Perawongmetha / File Photo

HONG KONG, December 2 (Reuters) – Asian stocks rose in choppy trading on Thursday, aided by gains in Chinese real estate stocks, although fears of the Omicron variant of the new corona virus limited the rise regionally.

Also in the stock markets were comments from Fed leader Jerome Powell who reiterated that he and other decision-makers will consider a faster winding down of the Fed’s bond buying program, a move that is believed to open the door to previous interest rate hikes.

This helped support the dollar, which, despite the cautious mood, gained ground on the yen, generally seen as an even safer haven than the dollar.

MSCI’s broadest index of Asia-Pacific equities outside Japan (.MIAPJ0000PUS) rose 0.2%, strengthened by Chinese blue chips (.CSI200) up 0.25% and Hong Kong (.HSI) up 0.2%.

An index of Hong Kong-listed mainland developers (.HSMPI) rose 2% after news late Wednesday that Chinese developers plan to sell bonds in China to raise 18 billion yuan ($ 2.83 billion), evidence that Beijing is marginally easing liquidity burden on cash – restrained sector. read more

However, the Japanese Nikkei (.N225) lost 0.6%, and all three major Wall Street references fell more than 1% overnight as a global rally slowed as news of the Omicron variant of the coronavirus became negative.

Omicron is fast becoming the dominant variant of the coronavirus in South Africa less than four weeks after it was first discovered there, and on Wednesday the United States became the last country to identify an Omicron case within its borders. read more

“All anyone can do at the moment is wait for every headline when it breaks, as there are a number of outstanding questions about the new variant that largely remain unanswered and will remain unanswered for days or weeks,” said Kyle Rodda, an analyst at Melbourne broker IG markets.

He added that with the Federal Reserve reducing its stimulus and building up to raise interest rates, “this is the first time in a very long time when markets have not taken a bad development as another excuse to buy stocks that expect an increase in liquidity. from the Fed “.

As another sign of a flight to safety, long-term US government bonds fell late in US hours. The yield on 30-year bonds fell to as low as 1.740%, the lowest since the beginning of January, and the 10-year reference rate fell to as low as 1.404% – a low of nine weeks.

Interest rates on the short end of the curve were more even on the chances that the US Federal Reserve will accelerate the downsizing of bond purchases.

On Wednesday, on his second day of testimony to Congress, Powell said the Fed must be ready to respond to the possibility that inflation may not decline in the second half of next year, as most forecasters expect. read more

This is likely to lead to an acceleration as the Fed scales down its asset buying program.

“We now expect the (Fed’s policy committee) to complete the purchase of assets in April 2022 and begin raising fund rates in June 2022,” CBA analysts said in a morning note.

The dollar index was stable, although the dollar rose around 0.25% to 113 yen, recovering some of the recent losses, thanks to the hawkish tone.

The risk-sensitive Australian dollar disappeared to $ 0.7114 not far from Tuesday’s low of $ 0.7063, the weakest since the beginning of November last year.

The oil price also picked up again, albeit after strong sales in recent days based on fears that the new variant will affect tourism.

Brent oil futures rose 0.9% to $ 69.48 a barrel, and US crude oil futures rose 0.76% to $ 66.08 a barrel, but still in line for Tuesday’s lowest level in over three months.

Spot gold fell 0.12% to $ 1,780 per ounce.

Editing Lincoln Feast

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