Asian Stock Market: China Covid concerns dent risk appetite, KOSPI leads bears

• Asia-Pacific equities print losses despite pullback in US Treasury bond yields.
• Doubts over China Covid numbers, medical facilities propel risk aversion.
• KOSPI drops the most even as South Korea promises policy support.
• BOJ’s unplanned bond operations and PBOC’s fund infusion fail to impress bulls.

Asian shares remain in the red even as the US Treasury bond yields retreat from the multi-day high during early Thursday. The reason could be linked to China-inflicted pessimism amid the year-end inaction.

While portraying the mood, the MSCI’s index of the Asia-Pacific shares outside Japan extends the previous day’s losses, down 0.95% intraday whereas Japan’s Nikkei 225 declines 1.20% on a day by the press time.

It’s worth noting that Japan conducted surprise bond buying for the second consecutive day to defend the yield curve and helped limit the recent losses of Nikkei 225.

That said, South Korea’s KOSPI prints the heaviest fall among its Asian peers, down nearly 2.0% at the latest, as Seoul promises policy support after witnessing downbeat November data that cloud the economic outlook. It should be observed that KOSPI is the weakest among the Asian equity indices when considering the year 2022 performance, down nearly 14% YoY as we write.

Multiple countries, including the US, the UK and Japan, announced requirements of Covid tests for Chinese travelers as doubts over Beijing’s reporting of data and a hidden jump in the virus numbers weigh on sentiment. On the same line could be Russia’s rejection of peace with Ukraine unless it accepts the treaty allowing additional territories, as well as an escalated war in the city of Kherson.

Amid these plays, the US 10-year Treasury yields drop 2.8 basis points to 3.858% by the press time, after rising the most since October 19 the previous day. Furthermore, S&P 500 Futures remain indecisive as downbeat bond coupons put a floor under the stock futures even as Wall Street closed in the red.

Elsewhere, the US Dollar Index (DXY) struggles to extend the two-day uptrend while the WTI crude oil price remains mildly offered during the third day of the south-run.

Looking forward, weekly prints of the US Initial Jobless Claims and Chicago PMI for December will be eyed for short-term directions.

Also read: Forex Today: Trading remains choppy ahead of year-end