Asian Stock Market: China keeps bears hopeful amid sluggish session

• Asian equities track Wall Street losses, ignores mildly firmer S&P 500 Futures, sluggish yields.
• China defends the zero covid policy while banks in Beijing intervene secretly.
• Light calendar, mixed concerns trouble traders but risk-off mood is likely to prevail.

Equities in the Asia-Pacific region hold lower ground during the sluggish start to the week even as the market fears emanating from China, Indonesia and the US remain intact heading into Monday’s European session.

While portraying the mood, the MSCI’s Index of Asia-Pacific shares outside Japan drops 1.42% whereas Japan’s Nikkei drops 1.31% by the press time.

Among the many catalysts that drove the risk-off mood in Asia, headlines from China gained major attention as Chinese Prime Minister Xi Jinping defends his zero-covid policy and determination to add more artillery. On the same line could be the headlines suggesting the Chinese bank’s intervention. “China's major state-owned banks were spotted swapping yuan for U.S. dollars in the forwards market and selling those dollars in the spot market on Monday morning, six banking sources said,” per Reuters. With this, markets in China are mostly red, which in turn drags shares from Hong Kong, New Zealand and Australia.

Elsewhere, Indonesia’s trade numbers came in mixed, mostly downbeat for September, but failed to impress the equity traders from Jakarta. Indonesia’s Exports for September came in at 20.28% compared to 27.91% market forecasts and 30.15% prior readings. Further details suggest that the Imports also dropped below 31.48% forecast and 32.81% previous readings to 22.02%. Even so, the Trade Balance improves to $4.99B compared to $4.84B market forecasts and $5.76B prior.

On a broader front, S&P 500 Futures part ways from Wall Street losses while the Treasury bond yields seesaw around the multi-month high amid a light calendar and an absence of major data/events. It should be noted that oil prices also pare recent losses and weigh on the Asia-Pacific equities amid the White House pressure on the OPEC+ members to halt/delay the latest supply cut actions.

Moving on, the US economic calendar is likely to remain empty throughout the week and may limit the market’s moves. However, pessimism surrounding China may exert downside pressure on the Asia-Pacific markets.