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Asian Markets In Retreat Over Virus Fears But Oil Rebounds

The Omicron strain’s emergence saw Japan close its doors to international visitors while casino stocks plunged after the arrest of gambling chief Alvin Chau in Macau


A Nikkei Index board outside a brokerage in Tokyo, Japan
A Nikkei Index board outside a brokerage in Tokyo, Japan. Photo: Reuters

 

Asia’s major markets saw heavy selling pressure again on Monday as nervous investors reacted to the escalating headlines over the spread of the newly-identified Omicron coronavirus variant.

Traders are worried the strain will derail nations’ economic recoveries and impact the tightening plans of some central banks.

But oil prices bounced more than $3 a barrel to recoup a chunk of Friday’s hits, while safe haven bonds and the yen lost ground as markets later latched onto hopes the new variant of concern would prove to be “mild.”

 

Also on AF: Chinese Stocks Delisting From the US: 25 On the Brink

 

Asian equities, which also suffered hefty selling pressure on Friday, extended their losses on Monday.

Tokyo led the losses, shedding 1.6%, after Japan said it will reinstate tough border measures, barring all new foreign arrivals, just weeks after a softening of strict entry rules. The news hit travel stocks, with airlines JAL and ANA shedding around 4% each.

In Hong Kong, casino operators plunged after police said the head of gambling enclave Macau’s largest junket operator had confessed to running illegal betting activities.

The arrest of Alvin Chau at the weekend is the first of such a high-profile figure from the city’s gaming industry and comes as Beijing embarks on a crackdown, with plans announced in September to increase government regulation of the sector.

MGM China lost more than 10%, while Galaxy Entertainment, Wynn Macau, Melco, SJM Holdings and Sands China also suffered steep losses.

 

Seoul, Taipei Fall Back

Overall, trading was erratic on Monday but there were signs of resilience as S&P 500 futures added 1.0% and Nasdaq futures 1.2%. Both indices suffered their sharpest fall in months on Friday with travel and airline stocks hit hard. EUROSTOXX 50 futures rallied 1.6%, while FTSE futures firmed 1.3%.

MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.1%, but found support ahead of its 2021 low.

Sydney, Seoul, Singapore, Taipei, Wellington and Manila also retreated. Shanghai also fell but the losses were limited, while Mumbai and Jakarta edged up.

The benchmark Nikkei 225 index, which temporarily moved above water in late morning trade, ended 467.70 points lower at 28,283.92. The broader Topix index slipped 1.84%, or 36.50 points, to 1,948.48.

The Hang Seng Index dropped 0.95%, or 228.28 points, to 23,852.24. The Shanghai Composite Index was marginally lower, dipping 1.39 points to 3,562.70, while the Shenzhen Composite Index on China’s second exchange edged up 0.39%, or 9.79 points, to 2,516.94.

 

Bonds Return Gains

Bonds gave back some of their hefty gains, with Treasury futures down 13 ticks. The market had rallied sharply as investors priced in the risk of a slower start to rate hikes from the US Federal Reserve, and less tightening by some other central banks.

Two-year Treasury yields edged up to 0.56%, after falling 14 basis points on Friday in the biggest drop since March last year. Fed fund futures had pushed the first rate rise out by a month or so.

The economic diary is also busy this week with China’s manufacturing PMIs on Tuesday to offer another update on the health of the Asian giant. The US ISM survey of factories is out on Wednesday, ahead of payrolls on Friday.

In commodity markets, oil prices bounced after suffering their largest one-day drop since April 2020 on Friday.

“The move all but guarantees the OPEC+ alliance will suspend its scheduled increase for January at its meeting on December 2,” wrote an analyst at ANZ in a note. “Such headwinds are the reason it’s been only gradually raising output in recent months, despite demand rebounding strongly.”

 

KEY FIGURES
Tokyo > Nikkei 225: DOWN 1.6% at 28,283.92 (close)
Hong Kong > Hang Seng Index: DOWN 1.0% at 23,852.24 (close)
Shanghai > Composite: FLAT at 3,562.70 (close)
New York > Dow: DOWN 2.5% at 34,899.34 (close)

 

  • Reuters, AFP with additional editing by Sean O’Meara

 

 

Read more:

Japan To Bar Foreign Visitors Due to Omicron Threat

Macau Casino Shares Plunge Amid Arrests, Junket Mogul Believed Held

 

Sean OMeara

Sean O'Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.

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