Asian stock market: China challenges the bears despite trade pessimism

• Asian shares remain mostly up as China anchors the market’s rise.
• PBOC’s MLF operation, US stimulus hopes favor the bulls.
• No Sino-American trade review meet, a slump in Japan GDP question the optimism.
• Virus figures firm up, New Zealand delays the general election.

Asian equities extend Friday’s welcome performance while heading into Monday’s European open. Although the failure of the US and China to have a trade review negotiations and the strengthening of the coronavirus (COVID-19) weighs on the risk-tone, not to forget Japanese GDP, liquidity injection by the People’s Bank of China (PBOC) favors the bulls to hold reins. It should be noted that US House Speaker Nancy Pelosi’s letter to the Senators, to return from one-month vacation announced last week, also favors the risk-on mood.

That said, MSCI’s index of Asia-Pacific shares outside Japan rise 0.70% whereas Japan’s Nikkei bears the burden of the record GDP contraction while declining 0.60% to 23,150. Further, Chinese stocks are gaining near 2.0% as the PBOC injected CNY700 billion via one-year medium-term lending (MLF) facility. Also supporting the Chinese stocks could be the halt of the sell-off in longer-dated US Treasuries.

The same helps the Australian equities to trim losses, ASX currently down 0.60%, despite record death toll in Victoria. Additionally, the upbeat performance of the dragon nation’s shares propelled New Zealand’s (NZ) NZX 50 beyond 1.70% gains even as the NZ government delayed the general election and showed readiness to announce further measures to combat the pandemic.

Elsewhere, traders in South Korea fail to ignore the recent surge in Asian virus figures with over 1.0% loss whereas numbers from Indonesia and India seem to follow the general trend of cautious optimism.

It’s worth mentioning that the US 10-year Treasury yields drop one basis point to 0.70% while the S&P 500 Futures rise around 0.30% by the press time.

Given the lack of major data/events, traders will have to keep eyes on the macros for fresh impulse. In doing so, the US NY Empire State Manufacturing Index, expected 16.5 versus 17.2 prior, will be in the spotlight.