Asian Stock Market: Consolidates recent gains as covid fears weigh on stimulus hopes

• Shares in Asia-Pacific fade the upside momentum as some of them correct from the record top.
• Global policymakers worry amid a jump in virus-led deaths despite strict activity restrictions.
• Aussie Retail Sales surprise with a drop, NZ Q4 CPI came in better than forecast and Japan’s CPI, PMI were mixed.
• Flash activity numbers, virus, fiscal package updates will be the key.

Rally in the Asia-Pacific equities stall during early Friday as the coronavirus (COVID-19) worries challenge the previous expectations of the US aid package. While portraying the mood, MSCI’s index of Asia-Pacific shares outside Japan drops 0.45% on a day whereas Japan’s Nikkei 225 follows the suit amid mixed prints of National Consumer Price Index (CPI) and Preliminary Jibun Bank Manufacturing PMI for December.

It should be noted that Australia’s ASX 200 and stocks in China were also in the red as the Sino-American tension joins -4.7% YoY drop in Aussie Retail Sales for December, versus +7.2% prior. Also challenging the mood could be China SAFE comments suggesting challenges to further ease money and news marking the cost of Canberra-Beijing tussle.

Indonesia’s IDX Composite becomes the biggest loser even as Bank Indonesia (BI) Governor Perry Warjiyo said “There is room for further policy rates cut.” On the contrary, New Zealand’s (NZ) NZX 50 gains over 1.0% to buck the trend after NZ CPI for the fourth quarter (Q4) rose past-0.0% forecast to 0.5% QoQ.

Market mood initially cheered US Republicans’ willingness to work with President Joe Biden on his administration’s top priority, a $1.9 trillion aid package. However, the mood soured after Biden said the covid death could jump to 500,000 next month. Following that, the US Centers for Disease Control and Prevention (CDC) Director’s doubts over the availability of vaccines in the pharmacies versus promised earlier by the Trump administration also dragged down the risks.

Furthermore, chatters over national border close in the UK and European policymakers’ readiness to inflate activity restrictions join The Times headlines suggesting Japan’s dropping of the Olympics to prints the risk-off mood.

Read: Latest covid headlines in focus

Amid these plays, US stock futures mark mild losses while 10-year Treasury yields pause recent upside near 1.10%. Further, commodities and antipodeans are also down even as the US dollar index (DXY) stays depressed for the fifth consecutive day.

Read: S&P 500 Futures ease from record top as global policymakers fear covid infections

Looking forward, investors will keep their eyes on the virus updates for fresh impulse while talks over the US stimulus and flash activity numbers from the developed economies can offer further direction.