Asian stocks climb but Omicron worries leave markets nervous


By Alun John

HONG KONG (Reuters) – Asian stocks edged up in choppy trading on Thursday, helped by advances in Chinese real estate stocks, although fears over the Omicron variant of the novel coronavirus have capped gains regionally.

Remarks by Fed Chairman Jerome Powell also weighed on stock markets, reiterating that he and other policymakers would consider a faster cut to the Fed’s bond buying program, a move widely seen as opening up. the door to earlier interest rate hikes.

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

The largest MSCI index of Asia-Pacific stocks excluding Japan rose 0.2%, boosted by Chinese blue chips up 0.25% and Hong Kong up 0.2%.

An index of mainland developers listed in Hong Kong rose 2% after news on Wednesday night that Chinese developers plan to sell bonds in China to raise a total of 18 billion yuan ($ 2.83 billion), evidence that Beijing slightly eases liquidity pressures in the cash-strapped sector.

However, Japan’s Nikkei lost 0.6%, and Wall Street’s three major benchmarks fell more than 1% overnight as a global rally came to a halt as news on the Omicron variant of the coronavirus turned negative.

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

“All anyone can do at the moment is wait for each title when it is released, as there are a series of unanswered questions about the new variant that remain largely unanswered and will remain so. for days or weeks, ”said Kyle Rodda, analyst at IG Melbourne Brokerage Markets.

He added that with the reduction of its stimulus measures and the rate hike by the Federal Reserve, “this is the first time in a very long time that the markets have not taken bad development as another excuse for buy stocks with the expectation of increased cash flow from the Nourished.

Another sign of a flight to safety, long-term US Treasury yields slipped late in the US hours. The yield on 30-year bonds fell to 1.740%, their lowest since early January, and benchmark 10-year yields fell to 1.404% – a nine-week low. [US/]

Yields at the short end of the curve were more stable due to the chances that the US Federal Reserve would step up its reduction in bond purchases.

On Wednesday, in his second day of testimony to Congress, Powell said the Fed had to be prepared to respond to the possibility that inflation might not decline in the second half of next year, as most forecasters said. are currently waiting there.

This would likely lead to an acceleration in the pace at which the Fed is easing its asset purchase program.

“We now expect (the Fed’s steering committee) to complete asset purchases in April 2022 and start raising the funds rate in June 2022,” CBA analysts said in a morning note.

The dollar index remained stable, although the greenback rose about 0.25% to 113 yen, regaining some of its recent losses, thanks to the hawkish tone.

The risk-sensitive Australian dollar was languishing at $ 0.7114 not far from Tuesday’s low of $ 0.7063, its lowest since early November last year.

Oil prices have also rebounded, albeit after falling sharply in recent days amid fears the new variant might hit travel.

Brent crude futures gained 0.9% to $ 69.48 per barrel, and US crude futures gained 0.76% to $ 66.08 per barrel, although still in sight from Tuesday’s three-month low.

Spot gold slipped 0.12% to $ 1,780 an ounce.

(Edited by Lincoln Feast)

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