Asian Stock Market: Bulls and bears jostle as Omicron, Fed poke investors

• Markets in Asia grinds lower ahead of the key US NFP.
• Mixed Fedspeak, Omicron in the US weigh on risks but China, WHO favor bulls.
• OECD cuts global growth forecasts, VIX rallies to yearly peak.
• Aussie trade, housing data came in mixed but softer yields favor Antipodeans, commodities.

Asian shares trade mixed as virus-linked fears join Fed’s measured response over inflation and chatters surrounding China. That said, MSCI’s index of Asia-Pacific shares outside Japan holds onto the bounce-off yearly low, up 0.30% intraday, whereas Japan’s Nikkei 225 marks 0.35% daily loss heading into Thursday’s European session.

Fed Chair’s Jerome Powell’s step back from the previously hawkish testimony while believing, per Reuters, that inflation will come down “meaningfully” in the second half of 2022, during testimony against a Senate Commission. On the contrary, Federal Reserve Bank of New York President John C. Williams said, per New York Times, that Omicron could prolong supply and demand mismatches, causing some inflation pressures to last. Further, Cleveland Fed President Loretta Mester hints at speeding up the taper and likely rates in the next year, per Bloomberg.

Further, the first Omicron case in the US pushed President Joe Biden’s administration to extend the rules for wearing a mask in public transit. Adding to the risk-aversion could be the latest economic forecast from the Organisation for Economic Co-operation and Development (OECD), suggesting the world GDP growing by 5.6% (previous 5.7%) in 2021, 4.5% in 2022, 3.2% in 2023, per Reuters.

On the contrary, Reuters’ story citing more Chinese developers’ raising bond issues marks the evidence that Beijing is marginally easing liquidity strains on the cash-strapped sector, which in turn favored stocks in China, although marginally. The same, however, can’t help equities in Australia and New Zealand (NZ) as mixed trade and housing data from Canberra joined firmer NZ Terms of Trade Index for Q3. Alternatively, traders from Indonesia, India and South Korea manage to track China-linked gains.

It’s worth noting that the US US 10-year Treasury yields lick their wounds at the lowest levels since early October, around 1.42% after refreshing the multi-day bottom with a 1.40% level the previous day. Alternatively, S&P 500 Futures print rises 0.35% to 4,523.

Above all, DBC’s Volatility Index (VIX) stays firmer around the yearly top, around 7.13 at the latest, whereas Goldman Sachs cites a measure of industry risk appetite to post the strongest risk-off conditions in the market during 2021. “Net leverage, a measure of industry risk appetite that takes into account long versus short positions, fell to a one-year low this week, according to data compiled by Goldman Sachs Group Inc.’s prime brokerage,” said Bloomberg.

Moving on, investors are likely witnessing a dull day amid a lack of major data/events ahead of Friday’s US jobs report. However, virus updates and second-tier data from the US may entertain traders.

Read: Yields stay pressured at 10-week low, S&P 500 Futures print mild gains amid sluggish markets