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Investors eye Suez blockage, lockdowns

(ATF) Hong Kong: Asian markets were defensive on Wednesday amid increased possibilities of lockdowns in Europe while oil prices jumped in response to a blockage in the Suez Canal.

Hong Kong’s markets were under additional pressure after the government halted the use of a COVID-19 vaccine developed by Germany’s BioNTech, citing defective packaging.

Japanese stocks were spooked by policymakers’ calls for higher minimum wages, which may put additional burden on smaller companies already struggling to recover from the pandemic.

Japan’s Nikkei 225 index slipped 2.04%, Australia’s S&P ASX 200 added 0.50%, Hong Kong’s Hang Seng index tumbled 2.03% and China’s CSI300 slipped 1.61%. Regionally, the MSCI Asia Pacific index retreated 1.72%.

Brent crude futures rose 2% to $62.13 a barrel, and West Texas Intermediate (WTI) crude futures added 2% to $59 as attempts continued to free a 400m-long container ship that ran aground in the Suez Canal, blocking vessels passing through one of the world’s most important waterways.

Analysts are assessing how the blockage of one of the world’s major shipping arteries will impact world commerce as a significant logjam of vessels is currently building up in the Mediterranean and Red Seas.

“With more than 50 vessels transiting the canal a day, even a temporary blockage can have a disproportionate effect on world trade,” Philip Young, Partner at Cooke, Young & Keidan told Asia Times Financial. “Integrated supply chains are already strained by the Covid-19 pandemic and this event will have a further knock on effect – for example on the Asia-Europe trade that transits the canal.”

US Treasuries were steady with the 10-year yield unchanged at 1.62% while the dollar climbed 0.2% to 92.50 against a basket of currencies.

Bond markets were calm after comments from Federal Reserve Chairman Jerome Powell allayed fears about inflation risks amid a sharp rebound in growth, which would result in a tighter monetary policy.

Bond markets now await Treasury auctions in the next couple of days to get a steer on yields after a disappointing seven-year auction last month triggered a selloff in global bond markets. Wednesday’s offerings include $61 billion of five-year notes.

Also on Asia Times Financial

 Asia Stocks

  • Japan’s Nikkei 225 index slipped 2.04%
  • Australia’s S&P ASX 200 added 0.50% 
  • Hong Kong’s Hang Seng index tumbled 2.03%
  • China’s CSI300 slipped 1.61%
  • The MSCI Asia Pacific index retreated 1.72%

Stock of the Day

China Literature Ltd shares rose as much as 17.4% after announcing earnings that suggested a stellar performance in the second half which was seen continuing in the near future. 

Umesh Desai

Umesh Desai is the Executive Editor at Asia Financial. Prior to this he spent over two decades with Reuters News as Asia Pacific Chief Correspondent in Hong Kong and Bureau Chief in Bombay. Before becoming a journalist Umesh was a credit ratings analyst with Moody's arm in India - ICRA. A chartered accountant by training, Umesh began his career as an equity analyst. His Twitter handle is @umesh_desai

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