Asian stock market: Risk aversion returns amid virus, US-China tussle

  • Asian equities retreat as coronavirus throttle economic restart.
  • South China Sea becomes a fresh episode of the Sino-American tension series.
  • China’s trade numbers recovered in June, imports of Iron ore, crude oil also surged.
  • India’s WPI Inflation can offer immediate direction, risk catalysts to keep the driver’s seat.

Shares in Asia fail to keep the latest upside momentum as risk factors weigh over hopes of further stimulus during the pre-European session on Tuesday. While portraying the mood, the MSCI index of Asia-Pacific shares outside Japan drops over 1.0% while Japan’s Nikkei drops 1.05% from the monthly top to 22,545 by the press time.

Be it fears of another lockdown in the key US states or the Washington-Beijing arguments over the South China Sea, the market’s risk sentiment dwindles off-late. The moves initially triggered the pullback of Wall Street benchmarks after US Secretary of State Mike Pompeo defied Beijing’s claim over the Asian region. Following that, the dragon nation did perform its routine of harshly criticizing the Trump administration.

The tussle among the world’s top two economies becomes fierce enough to supersede upbeat trader numbers from China. Not only headline data but increasing imports of Iron ore and oil also suggest that the world’s second-largest economy is overcoming the pandemic. Even so, stocks in Beijing, Australia and New Zealand remain on the back foot as we write.

It’s worth mentioning that the risk aversion fades strength when it comes to Indonesia’s IDX, up 0.13%, but India’s BSE Sensex, South Korea’s KOSPI and Hong Kong’s Hang Seng remain depressed. Also depicting the risk-off is the US 10-year Treasury yields that struggle around 0.63% by the press time.

Moving on, global traders await the start of the US earnings season with top-tier banks like JP Morgan, Wells Fargo and Citi on the cards. However, inflation data from India and the US, coupled with the risk catalysts, could offer intermediate moves.

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