The Delta variant once again manages to make Asian stocks slip on Tuesday with key markets and Chinese authorities in high alert, causing fear among investors.
The increasing number of cases in Asia have caused investors to take a step back to ponder upon the impact it could have on global economic growth.
In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.40% in early trading.
Japan’s Nikkei was off 0.85% in early trade.
China’s blue chip index CSI300 shed 0.80% while Hong Kong’s Hang Seng Index fell 0.83%.
Australia’s benchmark index, the S&P/ASX200 is off 0.25%, reached a record on Monday when Square Inc announced a $29 billion offer for buy-now-pay-later firm Afterpay Ltd.
Leave rates are expected to stay unchanged at 0.10% as the Reserve Bank of Australia tries to cope with the rising covid-19 cases in the region which eventually led to tapering the decision after Sydney and Brisbane recorded high number of cases per day.
In China, the Delta Variant continues to spread from the mainland to inland cities with the authorities taking action with stricter counter epidemic measures to take things under control.
“Millions have been locked down in China following the worst outbreak since the COVID crisis began and given risks to supply chains this might have more of an effect on the global economy,” said Elizabeth Tian, Citigroup’s equity derivative solutions director.
Prolonging the negative sentiment is an ongoing concern about regulation in sectors from technology, fintech to education.
“It’s a challenging time for Asian equities with the uncertainty that has been created by the regulatory measures,” Zhikai Chen, head of Asian equities at BNP Paribas Asset Management, said.
“There was some hand-holding from the China Securities Regulatory Commission (CSRC) last week to limit the spread of the contagion and counter the popular thinking of which sector is next. That worked for a few days but then we saw the flows start to reverse again.
“From a global investors point of view, they are looking at the choice of a fairly robust earnings season in U.S. and Europe to some extent and there’s a question market when look at Asia and think ‘do we need to be there’ right now…there is a short term recalibration of risk appetite.”
Even with the tech sector woes, electric vehicle make Li Auto just launched its dual primary listing in Hong Kong expected to raise $1.9 billion, according to its exchange filings.
The Dow Jones Industrial Average fell 0.28%, the S&P 500 lost 0.18% and the Nasdaq Composite added 0.06%.
The benchmark 10-year Treasury yield was down 5.5 basis points at 1.1839% in afternoon trading, extending a pattern of declines playing out since the spring.
The yield touched 1.151%, the lowest since July 20, shortly after an Institute for Supply Management report showed July U.S. manufacturing growth slowed for the second straight month.
In the U.S, trade and oil was down between 3.3% and 3.6% due to the widespread Delta variant, putting a halt to oil demands. Whereas in Asia, oil has started to track slightly higher.
U.S crude ticked up 0.31% to $71.46 a barrel. Brent crude was 0.32% up to $73.15 per barrel. Gold was slightly lower.
Spot gold was trading down 0.1% $1812.4352 per ounce.
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Source : TheEdgeMalaysia