Hong Kong, Nov. 22 (BNA): Asian stocks were on the defensive as a resurgence of the coronavirus in China heightened fears that Beijing may re-impose tough restrictions on the pandemic and that more restrictions could cause supply chain disruptions.
The dollar retreated from strong overnight gains on Tuesday while oil paused Monday’s decline, Reuters reported.
The broader Asia-Pacific index excluding Japan lost 0.25% in early trade, while China’s benchmark index fell 0.13%. The benchmark Hong Kong index fell 1.31%.
Japan’s benchmark Nikkei index opened 0.78% higher, while Australian shares rose 0.55%.
“Covid really put China in the front row for trading in Asia,” said Redmond Wong, market analyst for Greater China at Saxo Markets in Hong Kong.
Beijing warned on Monday that it was facing the most severe test of the pandemic, sparking investor fears that China may have to resume strict restrictions on movement and issue stay-at-home orders across cities.
Wong said rising cases in industrial cities could cause supply chain disruptions.
The dollar pared some of its strong overnight gains on Tuesday after investors flocked to the safe-haven currency amid tensions over the coronavirus outbreak in China, but analysts at the National Australia Bank questioned whether demand for the greenback was sustainable.
“The evidence that US inflation has peaked and could decline significantly in 2023, combined with developments in China and Europe, convinces us that a downward cycle for the US dollar is now well under way,” they said in a note.
US Treasury yields rose across most maturities on Tuesday amid expectations of a Federal Reserve rate hike. The benchmark 10-year Treasury yield rose six basis points.
Oil prices rose slightly in early Asian trading, a day after Saudi Arabia denied a media report that it was discussing increasing oil supply with OPEC and its allies.
US crude rose 0.27% to $80.26 a barrel on Tuesday, and Brent crude at $87.79, up 0.19%.
Spot gold was trading at $1,738.39 an ounce.
SM