Asian Stock Market: Covid-19 resurgence intensifies selling in Chinese equities

• Chinese equities plunge heavily on soaring Covid-19 cases in China.
• Japan’s Nikkie225 is positive around 0.4% amid a minute expansion in risk appetite.
• Gold prices, DXY, and US Treasury yields have tumbled ahead of the Fed’s interest rate decision.

Markets in the Asian domain are trading weak on Tuesday after soaring Covid-19 cases in China. The Chinese authority was required to resort to lockdown in Shenzhen city to contain the galloping cases of the Omicron variant.

Chinese equities have witnessed a carry-forward selling despite upbeat Retail Sales and Industrial Production numbers. China’s Retail Sales printed at 6.7% outperformed the preliminary estimates of 3% and prior print of 1.7%. While, the Industrial Production landed at 7.5%, improved significantly than the market consensus and previous print of 3.9% and 4.3% respectively. China A50 has plunged around 2.25%, at the press time.

Adding to that, the Peoples Bank of China has left its one-year Medium-term lending facility (MLF) rate unchanged against the expectation of a rate cut by 5 to 10 basis points (bps), which has also weighed on Chinese equities.

Meanwhile, Japan’s Nikkie225 is trading positive on a minute improvement in the risk appetite of investors. The US dollar index (DXY) is slipped below 99.00 while the Gold prices have tumbled near $1,940.

Going forward, markets are likely to remain subdued ahead of the monetary policy from the Federal Reserve (Fed), which is due on Wednesday.  The street is expecting a rate hike by 25 basis points (bps) and an aggressive hawkish stance for the later monetary policies. The 10-year US Treasury yields retreat from 2.15% amid uncertainty over the monetary policy action from the Fed.