Asian Stock Market: Nikkei begins 2022 on firmer footing, China suffers

• Asian equities trade mixed as China bucks the uptrend amid full markets.
• Wall Street ignored firmer yields amid stimulus hopes, Omicron, Fed chatters propel bond coupons.
• China Caixin Manufacturing PMI jumped to six-month high in December, Australia PMI rose as well.
• PMIs will decorate the calendar but virus updates, yields shouldn’t be missed as well.

Asian shares fail to cheer full markets even as Japan’s Nikkei 225 and Australia’s ASX 200 kick-start 2022 on a positive side, up more than 1.50% each. The reason could be linked to pessimism surrounding China and firmer Treasury yields.  That said, MSCI’s index of Asia-Pacific shares outside Japan drops 0.08% heading into Tuesday’s European session.

Stocks in Japan, New Zealand and Australia tracked firmer Wall Street benchmarks to begin the New Year on a firmer footing. Adding to the bullish bias could be hopes of further monetary easing from the key economies like the US and China.

It should be noted, however, that the worsening virus conditions in Beijing and elsewhere join firmer US Treasury yields to challenge the Asia-Pacific bulls. China’s Zhengzhou announced partial lockdown after record covid cases while Aussie policymakers also raised concerns over the shortage of the rapid testing kits due to a slew of people up for checking after the COVID-19 numbers rallied to an all-time high.

Alternatively, China’s Caixin Manufacturing PMI jumped to a six-month high in December while Australia’s Commonwealth Bank Manufacturing PMI also rose past 57.4 forecast and prior in the last month.

Markets in Indonesia print mild gains but South Korean traders turned cautious amid the latest rise in the covid cases. Further, Hang Seng remains on the back foot amid fears of Evergrande default and hardships for Chinese IT companies at home and abroad. Additionally, India’s BSE Sensex rise 0.30% at the latest amid indecision over the surge in virus cases and cautious optimism in Asia.

That said, DJI 30 and S&P 500 refreshed record top during the first trading day of 2022 while the US Treasury yields rallied to the six-week high the previous day.

Looking forward, US ISM Manufacturing PMI for December, expected 60.2 versus 61.1, will offer immediate direction to the markets. However, major attention will be given to the Fed rate-hike concerns and virus updates for clear direction.

Read: US Treasury yields hover around multi-day top after biggest jump in three months