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Asian stocks firm after Wall Street rout, but Omicron risks loom

Asian shares advanced on Tuesday, shrugging off a bruising Wall Street session, as Chinese markets cheered Beijing’s move to help troubled property firms, although surging cases of the Omicron coronavirus variant remain a worry for investors.


U.S. stock indexes retreated more than 1% as positive COVID-19 case counts rose and President Joe Biden’s social spending and climate bill hit a significant setback.


The negative mood brightened somewhat in Asian hours with European and U.S. stock futures up and some assets battered in Monday’s selling finding buyers, although volumes were thin heading into year-end holidays.


European markets appeared set for a higher open with the pan-region Euro Stoxx 50 futures STXEc1 up 1.1%. German DAX futures FDXc1 rose 0.93% while London’s FTSE futures FFIc1 added 1.02%. U.S. stock futures, the S&P 500 e-minis ESc1 , were up 0.72%.


MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS climbed 0.81% after declining on Monday to the lowest in a year.


Japan’s Nikkei .N225 rose 2% after two sessions of decline with chip-related Tokyo Electron 8035.T and Advantest 6857.T leading the pack, as investors bought into Monday’s heavy selloff. Australian stocks .AXJO were up 0.9%.


While the widespread selling in global shares appeared to have eased, investors are still concerned about Omicron risks.


“COVID remains a threat to the global economy. Initial evidence suggests the Omicron variant is more transmissible but results in less severe illness compared to previous variants,” economists at CBA wrote in a note.


Elsewhere in Asia, China and Hong Kong equities rose on Tuesday, with real estate stocks extending their rebound. China’s blue-chip CSI300 index .CSI300 was 0.45% higher while the Shanghai Composite Index .SSEC rose 0.67%. Hong Kong’s Hang Seng index .HIS added 0.58%.


The moves higher come as Beijing reportedly urged large private and state-owned property companies to acquire real estate projects from troubled developers to reduce risks that mounting debt piles will destabilise the economy.


“Chinese regulators’ encouragement for such acquisitions would help troubled developers ease their debt pressure and improve the current operating conditions of the whole real estate industry,” said Zhang Zihua, chief investment officer at Beijing Yunyi Asset Management.


“Thanks to the latest signs of government support, sentiment in the sector has been boosted. That’s why we are seeing real estate companies and other relevant sectors rising in mainland China and Hong Kong today.”


However, China’s video and live-streaming platforms listed in Hong Kong such as Bilibili 9626.HK and Kuaishou Technology 1024.HK slumped, after Beijing fined China’s “queen of livestreaming” Viya for tax evasion, stoking fears of fresh crackdowns.


On Monday, the Dow Jones Industrial Average .DJI fell 1.23%, the S&P 500 <.SPX lost> 1.14% and the Nasdaq Composite .IXIC dropped 1.24%.


Europe’s main indexes also sold off after British Prime Minister Boris Johnson said he would tighten coronavirus curbs if needed, after the Netherlands began a fourth lockdown and others in the region considered Christmas restrictions.


The dollar index =USD , which tracks the greenback against a basket of currencies of other major trading partners, was down at 96.493.


The yield on benchmark 10-year Treasury notes US10YT=RR rose to 1.4259% compared with its U.S. close of 1.419% on Monday. The two-year yield US2YT=RR , which rises with traders’ expectations of higher Fed fund rates, touched 0.636% compared with a U.S. close of 0.63%.


Oil prices started to recover from concerns the spread of the Omicron variant would crimp demand for fuel and signs of improving supply.


U.S. crude CLc1 ticked up 1.31% to $69.51 a barrel. Brent crude LCOc1 rose to $72.25 per barrel.


Gold was slightly higher. Spot gold XAU= was traded at $1,792.01 per ounce.

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