Asian stocks bounce from one-year lows, China rises on monetary easing

SINGAPORE, December 7 (Reuters) – Asian equities staged an improvement on Tuesday after declining concerns about the impact of the Omicron variant while Chinese markets were supported by the central bank’s easing of monetary policy.

MSCI̵[ads1]7;s broadest index of Asia-Pacific equities outside Japan (.MIAPJ0000PUS) rose 1.3% and was heading for its biggest jump in two months, after falling on Monday to its lowest level in one year.

Euro Stoxx 50 futures rose 0.5% and FTSE futures rose 0.08% in early trading, indicating a fixed market open after European equities ended higher on Monday.

China’s CSI300 index (.CSI300) rose 0.6% and Hong Kong’s Hang Seng index (.HSI) rose 1.7% as the central bank released $ 188 billion in liquidity through a policy easing. read more

“With this cut, decision makers are demonstrating a more powerful approach to preventing a complete route in the real estate market,” David Chao, global market strategist, Asia Pacific, formerly Japan, told Invesco in a note.

The People’s Bank of China said on Monday that it would cut the amount of cash that banks have to keep in reserve, the second such move this year, and free up funds in long-term liquidity to support stifling economic growth.

China is in a downturn in the middle of the cycle and the RRR cut is exactly what the economy needs to get back on track, Chao said. “It is possible that more RRR cuts are pending over the next year to stabilize growth,” he added.

Elsewhere, Australia’s S & P / ASX200 (.AXJO) rose 0.95%, while Japan’s Nikkei (.N225) rose 2.1% as risk-on-sentiment pushed markets upward.

MSCI’s main Asia-Japan benchmark index has lost around 5% so far this year, with Hong Kong markets among the big losers, while Indian (.BSESN) and Taiwanese stocks (.TWII) performed better.

Shares of troubled developer Evergrande (3333.HK) rose 1.7% after reaching a record low on Monday as markets waited to see if the real estate giant paid $ 82.5 million with a 30-day deferral period approaching the end .

Elsewhere, markets were supported by gains on Wall Street, where economically sensitive stocks performed better.

“Although epidemiologists have rightly warned against premature conclusions about Omicron, the markets undoubtedly assumed that last week’s brutal sales should have been milder,” said Vishnu Varathan, head of finance and strategy at Mizuho Bank, in a note.

“After all, early assessments of Omicron cases have been declared mild, which encourages half-full relief.”

Omicron has spread to about a third of U.S. states, but the Delta version accounts for the majority of COVID-19 infections in the United States, health officials said Sunday. read more

Dr. Anthony Fauci, the United States’ top official for infectious diseases, told CNN that it does not appear that Omicron has a “high degree of severity.”

Shares on Wall Street closed on Monday.

Risk-on sentiment also helped the dollar climb against safe-haven currencies such as the Japanese yen, which lost 0.6% overnight, while the risk-averse Australian dollar also found buyers.

Also support for the dollar was the expectation that the Federal Reserve will accelerate the phasing out of its bond buying program when it meets next week in response to a tighter labor market.

Oil prices ticked higher, consolidating a decline of almost 5% the day before as concerns about the effect of the Omicron variant on global fuel demand eased.

Brent oil futures strengthened 0.9% to $ 73.7 a barrel, after settling 4.6% on Monday.

Gold prices were stable at $ 1,778.5 per ounce on expectations that US consumer price data coming later this week will show that inflation is rising.

Reporting by Anshuman Daga; Editing Sam Holmes and Lincoln Feast.

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