Anshuman Daaga

SINGAPORE, (Reuters) – Asian shares edged up on Tuesday due to receding concerns about the Omicron variant’s impact. However, Chinese markets gained following the ease in monetary policy by the central bank.

After falling to its lowest point in one year on Monday, MSCI’s largest index of Asia-Pacific shares was up 0.6%.

This year’s benchmark lost 6%, with Hong Kong markets being among the biggest losers. However, Indian and Taiwanese stocks have outperformed.

On Tuesday, Australia’s S&P/ASX200 rose 0.5%, while advanced 1.1% as risk-on sentiment pushed U.S. stocks higher.

China’s CSI300 index grew 0.7% while Hong Kong’s climbed 1.3%. The central bank eased $188 million in liquidity by releasing it through a policy easing.

People’s Bank of China (PBOC) announced on Monday that they would reduce the amount of cash banks have to hold in reserve. It is the second such move of the year. The bank also released long-term liquidity funds to support slowing economic growth.

The second largest economy in the world, after a remarkable recovery from last year’s pandemic slump has been struggling to gain momentum as it deals with slowing production, persistent COVID-19 epidemics, and debt problems in its property market.

Vishnu Varathan (head of economics at Mizuho Bank) stated in a note that Monday’s action was “a convenient, but not coincident” cushion for Evergrande’s imminent debt default.

Evergrande’s shares rose by 7% following a Monday record-breaking low. The markets were waiting to find out if Evergrande has received $82.5 million in coupons. There was a 30-day grace period.

Wall Street’s gains supported markets, where more economically sensitive stocks performed better than the rest.

According to Varathan, Mizuho Bank: “While epidemiologists rightly warn against making premature conclusions about Omicron,” he stated that markets had arguably concluded that the brutal sell-off last week should have been more mild.

“After all Omicron cases were initially assessed mildly, which has spurred half-full relief.”

Omicron is now in about one-third of the U.S., however, the Delta variant accounts for most COVID-19 cases, according to health officials on Sunday. CNN was told by Dr. Anthony Fauci that Omicron is not a serious disease.

Wall Street stocks closed in a sea green, as value stocks rose 1.5%, while growth stocks saw a 0.9% increase.

The dollar gained against safer haven currencies like the Japanese yen which fell 0.6% overnight. However, buyers were also attracted to the more risk-friendly Australian dollars. [FRX/]

The expectation that the Federal Reserve would accelerate their tapering of its bond-buying program next week to address a tightening labor market was also a support for the dollar. In order to maintain low inflation, the Federal Reserve is likely to increase rates earlier than anticipated.

As concerns over the Omicron variation’s impact on global fuel demand eased, oil prices rose.

After settling 4.6% lower on Monday, futures rose 0.6% and reached $73.5/barrel. [O/R]

The gold price was steady at $1.779.5 an ounce, based on U.S. consumer data expected to show an inflation increase later in the week.