Yields, Asian stocks print mild gains as coronavirus fears recede

• US 10-year Treasury yields remain mildly bid after recovering most of Friday’s losses, Asian stocks grind higher.
• Omicron fears recede despite increasing count, PBOC’s RRR cut and Japan stimulus hope add to the market’s cautious optimism.
• China trade numbers came in mixed, RBA cites limited economic risk from covid variant.

Market sentiment stays positive, despite lacking momentum, amid ebbing fears of the South African covid variant and expectations that the latest stimulus measures will protect economies, during early Tuesday.

While portraying the same, the US 10-year Treasury yields rise 1.5 basis points (bps) near 1.45% whereas the S&P 500 Futures print 0.30% intraday gains at the latest. Further, the MSCI’s index of Asia-Pacific shares outside Japan rises 0.90% on a day whereas Japan’s Nikkei rallies 2.0% heading into the European session.

Omicron cases increase in Australia, China and India of late, joining the league of the UK, Europe and other Western leaders. However, an absence of notable virus-led deaths and expectations of finding a cure to the COVID-19 strain seems to keep the market’s positive amid a lack of major data/events, especially after China and Aussie catalysts are out.

That said, China's Trade Balance eased below $82.75B forecasts to $71.72B while the Exports improved from 17.2% to 22.0%. However, notable was the jump in the Imports to 31.4% versus 19.5% market consensus and 20.6% previous readout. On the other hand, the RBA meets market expectations to keep the benchmark rate unchanged at 0.1% and the weekly bond purchases of $4.0 billion intact until at least mid-February 2022. The RBA also said, “The omicron strain is a new source of uncertainty, but it is not expected to derail the recovery.”

It’s worth noting the People’s Bank of China’s (PBOC) Reserve Ratio Requirement (RRR) actions join Japan’s readiness for record stimulus to propel stock in China and Tokyo. Further, Australia’s ASX 200 rises 1.0% whereas New Zealand’s NZX 50 marks 0.40% intraday gains as the Reserve Bank of New Zealand (RBNZ) policymakers cite inflation concerns.

Elsewhere, South Korea’s KOSPI and Indonesia’s IDX Composite tracked Chinese equities while India’s BSE Sensex rises 1.0% in hopes of inaction from the Reserve Bank of India (RBI).

Looking forward, a lack of major data/events will keep the markets calm, helping to extend the previous moves, ahead of Friday’s US inflation data.

Read: US inflation and Omicron impact seen as key factors for dollar