Asian markets rally with Wall St as Powell eases inflation fears

Asia markets up as Omicron fears ease

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Hong Kong: Asian stock markets opened higher on Tuesday. Investors were excited by Wall Street’s strong rebound and hope that the latest variant of the coronavirus will not be as dangerous as previously feared.

The Omicron variant has been found worldwide, but no deaths have been reported. Authorities around the world are racing to determine its infectiousness and the effectiveness of existing vaccines.

Anthony Fauci, a top US epidemiological consultant, said over the weekend that although more information is needed, preliminary data on the severity of the variant is “a bit encouraging.”

The Hong Kong Hang Seng Index opened sharply higher, while the Shanghai Index rose slightly.

In Japan, the benchmark Nikkei 225 index rose 1.25% in early trading.

“Japanese shares are seen gaining, as US stocks rallied, led by sectors which are sensitive to business cycles after strong concerns about the Omicron variant receded,” Okasan Online Securities said in a note.

“The economic data looks very good,” Sylvia Jablonski, Defiance ETFs chief investment officer & co-founder, told Bloomberg Television, noting that even long-term worries about the US Federal Reserve ending its ultra-loose monetary policy were not weighing on sentiment for the time being.

“We don’t need the same sort of monetary stimulus that we had before so maybe the tapering isn’t so bad — we don’t expect it to be too out of control or too quick so there is some good news for buying on the dip,” she said.

Singapore, Jakarta, Wellington and Seoul were all slightly up, while stocks in Bangkok and Manila dipped slightly.

On Monday, European and US equities had rebounded on the Omicron news.

London’s blue-chip FTSE 100 index rose 1.5 percent, with similar gains recorded in Frankfurt and Paris.

Wall Street also had a strong day, with the Dow up 1.9 percent.

“It’s been a positive start to the week for the FTSE 100, and European markets more generally, as concerns over the Omicron variant continue to diminish on further evidence of mild symptoms and so far no deaths reported because of getting the virus,” said CMC Markets analyst Michael Hewson.

However, in China, the specter of potential debt default by large real estate developers is looming.

Sunshine 100 China Holdings stated that it has missed the repayment deadline, which has aggravated the deep concern about the real estate market caused by the huge debt of Evergrande Group, as well as the concern of Kaisa Group.

In response to the crisis, the People’s Bank of China said on Monday that it will lower the deposit reserve ratio of most banks by 0.5 percentage points from December 15.

The central bank said in a statement that the move reduces the cash reserves that banks must hold, which will allow 1.2 trillion yuan (US$188 billion) to be injected into the economy over the long term.

After Beijing’s tightening of housing regulations and a regulatory crackdown on speculation, China’s real estate industry-the main growth driver of the world’s second-largest economy-has cooled in recent months.

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