China COVID & Fines At Centre Of Risk-Negative Feel, Japan Bucks Trend

Worries from several areas weighed on most of the major equity benchmarks that were open for dealing during Asia-Pac hours.

• Chinese COVID fear (centring on Shanghai detecting the BA.5 variant for the first time & Macau shuttering most of its businesses for a week) coupled with a fresh round of fines for some of the tech giants (Alibaba & Tencent) meant that Chinese & Hong Kong equities underperformed the wider equity space, with the Hang Seng Tech index trading the best part of 4% softer at typing, while the benchmark CSI 300 sits ~2% worse off. Travel-related names and casinos struggled, as you would expect when assessing the aforementioned news flow.
• Worries surrounding the European gas supply saga continue to feed into the risk-negative narrative (even with Canada returning a repaired Nord Stream turbine back to Germany), while Tesla CEO Musk’s attempt to pull out of a takeover of Twitter applied further pressure to the space. The S&P 500 contract last deals 0.6% softer on the day.
• Japan was the exception to the broader rule, with the reaction to the country’s ruling coalition extending its grip on power via the latest round of upper house elections initially generating a positive market reaction, before the wider spread risk aversion pulled Japanese equities back from best levels (Nikkei 225 +0.9% at typing).