Asia report: China stocks bounce on mixed day for region

Stock markets were mixed in Asia on Tuesday, with Chinese markets bouncing from Monday’s losses as investors kept an eye on the growing outbreak of Covid-19 in Shanghai.

In Japan, the Nikkei 225 was down 1.81% at 26,334.98, as the yen weakened 0.18% against the dollar to last trade at JPY 125.60.

It was a negative day for the benchmark’s major components, with robotics specialist Fanuc last down 5.47%, Uniqlo owner Fast Retailing tumbling 3.18%, and tech investing giant SoftBank Group 0.87% lower.

The broader Topix index was off 1.38% by the end of trading in Tokyo, closing at 1,863.63.

On the mainland, the Shanghai Composite was up 1.46% at 3,213.33, and the smaller, technology-centric Shenzhen Composite was 1.81% firmer at 2,047.88.

China’s economic centre of Shanghai remained in strict lockdown conditions, a week after a more liberal two-part lockdown was set to end.

Reports from the city suggest some residents are finding it difficult to access food and other essential supplies from inside locked-up residential compounds.

Videos shared on social media in recent days show drones above the city broadcasting government orders to residents, telling them not to open their windows or sing, and to “control the soul’s desire for freedom”.

South Korea’s Kospi was off 0.98% at 2,666.76, while the Hang Seng Index in Hong Kong was 0.52% firmer at 21,319.13.

Video games firms were among the risers in the special administrative region, after regulators in Beijing lifted a months-long halt on approving the monetisation of new games.

NetEase was up 4.21% in Hong Kong trading, while Tencent Holdings was 3.62% firmer.

The blue-chip technology stocks were on the back foot in Seoul, however, with Samsung Electronics down 1.33% and SK Hynix losing 0.45%.

“US and European futures are trading as investors pay attention to bonds' sell-off, which left the 10-year Treasury yield at its highest level since 2018,” said AvaTrade chief market analyst Naeem Aslam of the global situation on Tuesday morning.

“This is chiefly due to higher inflation readings, tightening monetary policies, and China's covid outbreak.”

Additionally, Aslam said investors were anxious about the spillover effect of sanctions imposed on Russia amid its ongoing invasion in Ukraine.

“The trading momentum over in Asia wasn't also a positive one.

“Most of the Asia-Pacific equity indices fell for the second day in a row, and this is further dampening the mood among traders in European trading hours.”

Oil prices were strengthening as the region went to bed, with Brent crude futures last up 3.37% at $101.80 on ICE, and West Texas Intermediate rising 3.15% on NYMEX to $97.26 per barrel.

In Australia, the S&P/ASX 200 slipped 0.42% to 7,454.00, while across the Tasman Sea, New Zealand’s S&P/NZX 50 was 0.36% weaker at 11,889.17.

The down under dollars were both stronger on the greenback, with the Aussie last ahead 0.22% at AUD 1.3452, and the Kiwi advancing 0.12% to NZD 1.4634.