Resurgent Infections In China and Inflation In Japan Drag Asian Markets Down

Arjun Pandit
23 Dec, 2022
New York City

Markets in Asia traded weak on the worries that fast spreading highly infectious Omicron subvariant BF.7 in China may slow the resumption of social mobility. 

After the easing of zero-Covid policy, Covid-19 virus has rapidly spread in large cities and local estimates suggest an infection rate of 60% among Chinese citizens. 

Despite the social mobility relaxation, vehicle traffic and the number of people using public transport remain low in Shanghai, Beijing and Shenzhen. 

The Shanghai Composite index decreased 0.3% to 3,045.87 and the Hang Seng index dropped 0.4% to 19,593.06. 

For the week, the Shanghai Composite declined 3.8% and the Hang Seng index rose 0.7%. 

Stocks in Tokyo were also under pressure and the yen closed at 132.71 against the U.S. dollar. 

Market sentiment was weak after core inflation increased to a new 4-decade high. 

Core inflation index in November increased to 3.7% from 3.6% annual pace in October, nearing the high of 4% in December 1981. 

Investors sold Japanese stocks and tech stocks led the decliners on the worries that the U.S. Federal Reserve may continue its aggressive rate hike campaign after the latest upward economic growth revision. 

Tokyo Electron dropped 3.7% to 39,200.0 yen and Advantest Corp plunged 4.5% to 8,500.0 yen after Micro Technology reported a sharp decline in revenue and swung to a loss in its latest quarter ending in November. 

Micron also announced it plans to trim its labor force by 10% and halt bonuses in 2023. 

The Nikkei average dropped 1.03% to 26,235.25 and extended losses in the week to 4.69%. 

Kansai Electric Power rose 5.3% to  1,257.0 yen after the government announced its plan to maximize the use of nuclear power.