Asian Stock Market: China probes bulls on fresh covid woes

• Asian equities fade early session gains as Beijing reports record high daily new covid cases, Shanghai pushes for more restrictions.
• Government change in Australia fails to gain any major attention.
• RBNZ, Quad Summit in Tokyo and risk catalysts are in focus this week.

Market sentiment remains mixed during early Monday as covid headlines from China battle mixed Fedspeak and a light calendar to portray a sluggish Asian session. Amid these plays, the MSCI’s index of Asia-Pacific shares ex-Japan drops 0.75% intraday but Japan’s Nikkei 225 prints 0.75% daily gains by the press time.

That said, China’s Beijing reports the record new covid cases on Monday, which in turn renewed expectations of fresh lockdowns and weigh on the market sentiment. ''The city reported 99 cases for Sunday, up from 61 on Saturday,'' said Bloomberg.

During the weekend, Reuters reported that Shanghai's central Jingan district, a key commercial area of the Chinese financial hub, will require all supermarkets and shops to shut and residents to stay home until at least Tuesday.

It’s worth noting, however, that Mainland China's new coronavirus cases eased to 869 from 898 prior.

Amid these plays, China’s headline equity benchmarks are around 1.0% whereas Hong Kong’s Hang Seng declines 1.7% by the press time.

Pessimism in China also weighs on equities in South Korea, Indonesia and India whereas Australia’s ASX 200 and New Zealand’s NZX 50 managed to stay defensive.

That said, ASX 200 might have cheered the Labour Party’s first victory in nine years, as well as Reserve Bank of Australia (RBA) Assistant Governor Christopher Kent’s hints of a gradual downsizing of the RBA’s balance sheet.

On a broader front, the US 10-year Treasury yields rise by around 3.5 points (bps) to 2.82% whereas the S&P 500 Futures add near 1.0% gains, to 3,940 at the latest.

Although headlines surrounding the covid, geopolitics and inflation are the keys for market players of late, chatters about the Fed and the Quad leader’s discussion in Tokyo will also be important for near-term directions.