Asia’s traders started the week on a broadly positive note on Monday but uncertainty remained ahead of an expected series of interest rate hikes by the Federal Reserve.
And that wasn’t the only thing worrying investors, with data showing growth in China’s economy slowed at the end of last year and the fast-spreading Omicron coronavirus variant continuing to cast a shadow across trading floors.
Fed officials were out in force last week flagging the merits of raising borrowing costs as soon as March, though boss Jerome Powell said they would be careful to ensure they do not knock the recovery in the world’s top economy off course.
Still, expectations that the era of cheap cash that has helped power markets to record or multi-year highs is over has weighed heavily for months, while data showing consumer prices rocketing at a pace not seen in four decades has added to the downbeat mood.
A weak reading on retail sales for December caused by concern about the latest Covid wave and higher prices was compounded by a University of Michigan survey showing consumer sentiment fell sharply in January.
That saw Wall Street turn in a tepid performance on Friday, with disappointing bank earnings also dragging sentiment.
Despite the uncertain start to 2022 for global markets, Eli Lee at Bank of Singapore remained upbeat about the outlook.
“As we head into 2022, we believe that the post-pandemic bull market remains broadly intact,” he said in a commentary.
“Historically, bull markets do not end at the beginning of rate hike cycles, and positive trends in global economic growth and earnings continue to be positive fundamental drivers for the market.”
Asia mostly rose, with Tokyo, Shanghai, Sydney, Singapore, Wellington, Taipei, Mumbai and Bangkok up but Hong Kong, Seoul, Manila and Jakarta were down. London, Paris and Frankfurt all rose at the open.
China Interest Rates
The benchmark Nikkei 225 index rose 0.74% or 209.24 points to 28,333.52, while the broader Topix index gained 0.46% or 9.05 points to 1,986.71.
The Hang Seng Index shed 0.68%, or 165.29 points, to 24,218.03. The Shanghai Composite Index rose 0.58%, or 20.41 points, to 3,541.67, while the Shenzhen Composite Index on China’s second exchange gained 1.54%, or 37.62 points, to 2,473.01.
Mainland Chinese shares were given some support by news that the central bank had cut interest rates for the first time since the height of the pandemic last year as officials look to kickstart stuttering growth.
Data showed on Monday that the world’s number two economy expanded 8.1% last year – its best rate in 10 years – but slowed in the final three months as it was hit by virus lockdowns around the country and weakness in the crucial property sector.
Macau Casino Stocks Rocket
Much of the annual growth came in the first half of the year, with the economy rocked by a series of shocks towards the end of 2021.
Hong Kong-listed casino stocks rocketed after Macau officials on Friday unveiled regulatory measures for the sector that were not as bad as initially feared.
Under the proposed bill, the number of gaming concessions will remain at six but their term will be halved to 10 years, while the proportion of local ownership in casino firms will be lifted from 10% to 15%.
Sands Macau soared more than 14%, Wynn Macau and MGM China nearly 12% each, while Melco was up 5%. That followed strong gains in New York, where Las Vegas Sands and Melco rocketed more than 14%.
Key figures around 0820 GMT
Tokyo > Nikkei 225: UP 0.7% at 28,333.52 (close)
Hong Kong > Hang Seng Index: DOWN 0.7% at 24,218.03 (close)
Shanghai > Composite: UP 0.6% at 3,541.67 (close)
London > FTSE 100: UP 0.5% at 7,576.93
New York > DOW: DOWN 0.6% at 35,911.81 (close)
- AFP with additional editing by Sean O’Meara