Business Maverick: Asia stocks mixed as traders mull China Covid path: markets wrap

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Stocks were mixed in Asia amid fragile sentiment as investors weighed up the impact of Covid infections in China and parsed comments from Federal Reserve officials on interest rate hikes.

“In a year like this, it is so difficult and often a fool’s errand to read too much into any one speech from one Federal Reserve official,” Sarah Ponczek, financial adviser at UBS Private Wealth Management, said on Bloomberg Television. “The reality is that we do expect that the Federal Reserve is still likely going to raise interest rates again in December.”

The dollar fell after advancing on Monday amid appetite for haven assets. Government bond-yield curves flattened in Australia and New Zealand with gains in short-maturity rates, following similar moves in the US on Monday. Treasury yields declined on Tuesday. JPMorgan Chase & Co strategist Marko Kolanovic, who until recently had been one of the most vocal bulls on Wall Street, said risky assets may languish until the Fed reverses course on its hawkish campaign to raise interest rates. A near-term pivot is likely not in the cards and JPMorgan expects assets to still be “range bound with a more pronounced downside risk”.

Meanwhile, China reopening may only be a story for the second quarter of next year as the country is entering winter months, according to Dwyfor Evans, head of Asia Pacific macro strategy at State Street Global Markets. “To actually expect a very conservative political body to suddenly open up China and remove restrictions in November and into the most dangerous season as it were for these types of pandemic instances, we always thought that was very, very optimistic,” Evans said on Bloomberg Television.

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Business Maverick: Stocks drop amid China Covid worries, Fed rate: markets wrapStocks and emerging-market currencies decline in Asia amid concern that China may tighten Covid curbs after reported deaths, and as investors weigh the outlook for US rate hikes.
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