Asian stock start: Sino-American tension, virus worries offer sluggish start to Q3

• Asian equities alternate gains with losses after closing the Q2 on a positive note.
• Beijing-Washington tussle joins rising US virus figures to probe the previous risk-on mood.
• Chinese PMI offered a ray of hope at the end of the tunnel but figures from Australia, Japan dimmed the sentiment.
• FOMC minutes, US data and risk catalysts will be in focus.

Shares in Asia dwindle at the start of the third quarter (Q3) as traders reassess Tuesday’s risk-on mood and quarter-end position resizing. Also confusing the investors are mixed set of activity data from China, Japan and Australia as well as cautious sentiment ahead of the key US data/events.

Among the main risk catalysts, China’s objection to the US trimming Hong Kong’s special status and the surge in the latest American coronavirus (COVID-19) figures above 40,000 gained major attention. Also weighing the risk-tone sentiment is the bill passed by the US Congress to give refugee status to certain Hong Kong residents, per Wall Street Journal (WSJ).

While portraying this, the MSCI index of Asia-Pacific shares, ex-Japan, gain 0.45% whereas Nikkei 225 prints 0.63% loss to trade take rounds to 22,163 ahead of the European session on Wednesday. Australia’s ASX 200 ignores second-tier PMIs and housing data from home to follow Chinese stocks while cheering better than forecast Caixin Manufacturing PMI. Though, New Zealand’s NZX 50 and Indonesia’s IDX Composite print mild losses despite upbeat housing and inflation data respectively.

South Korea’s KOSPI and India’s BSE Sensex are flashing gain below 0.50% while markets in Hong Kong are closed. Further, the US 10-year Treasury yields extend the previous day’s recovery moves toward 0.70% whereas S&P 500 Futures drop 0.28% to 3,081 as we write.

Although the Asian calendar has nothing major left for publishing, traders will keep jostling with the US-China and virus headlines for immediate direction. However, FOMC Minutes, US ISM Non-Manufacturing PMI and US ADP Employment Change will be the key to follow during the later part of the day.