HONG KONG–Asian shares slipped on Tuesday, following overnight declines on Wall Street and on renewed fears about outbreaks of COVID-19 in China while the dollar hovered below last week’s peak, but traders’ main focus was approaching central bank meetings.
MSCI’s broadest index of Asia-Pacific shares outside Japan, fell 0.64 percent, walking back some of the previous day’s 1.8 percent gain, and heading back towards last week’s two-year low.
Asian tech stocks like Alibaba and Samsung helped lead the declines, after US equity markets had closed lower overnight, impacted by reports Apple plans to slow hiring and spending growth next year.
Chinese blue chips .CSI300 fell 1.11 percent also giving back gains made the previous day gains as mainland China reported 776 new coronavirus cases, sparking fears of renewed restrictions on activity to curb outbreaks.
Nomura said 41 Chinese cities are currently implementing some sort of restrictions to control outbreaks.
European markets were set to open lower with EUROSTOXX 50 futures off 0.75 percent and FTSE futures losing 0.4 percent. Japan’s Nikkei gained 0.75 percent after having been on holiday for Monday’s rally.
But with markets awaiting major macroeconomic news, the overall picture was murky.
“It’s a bit like ‘paint by numbers’ at the moment, you’ve got a picture to fill in, but we don’t have all the colors yet,” said Kerry Craig, global market strategist at JPMorgan Asset Management.
“There are a couple of things missing (such as) the direction of the labor market and unemployment rate in the US, and whether central banks will step back and say ‘that’s the peak in inflation and we don’t need to be as hawkish’, or ‘we’re going to be really aggressive’.”
Markets are expecting a large 75 basis point interest rate hike at the US Federal Reserve’s meeting next week, moving away from a flirtation with the chance of an enormous 100 basis point rise, though market pricing still indicates a 30 percent chance, according to the CME’s Fedwatch tool.
