SINGAPORE (BLOOMBERG) - Asian stocks followed their US peers lower on Friday (Dec 10) as traders weighed the economic threat of virus restrictions against optimism about the efficacy of vaccines.
Chinese markets were also in focus after China Evergrande Group and Kaisa Group Holdings officially defaulted on their dollar debt. Evergrande shares fell about 2 per cent. Kaisa's shares, which are traded in Hong Kong, were suspended.
Japan's Nikkei index dropped 0.4 per cent while Hong Kong's Hang Seng lost 0.6 per cent and the Shanghai Composite declined 0.35 per cent.
Australia's S&P/ASX 200 retreated 0.4 per cent while South Korea's Kospi declined 0.6 per cent.
In Singapore, the Straits Times Index was down 0.3 per cent at 11.28am local time.
S&P 500 futures in New York gained 0.2 per cent. The index fell 0.7 per cent on Thursday.
China's central bank took further steps to limit the yuan's strength - setting a weaker reference rate than expected - a day after policymakers raised their foreign currency reserve requirement ratio for a second time this year. The offshore yuan reversed earlier declines to edge higher.
Investors are mulling the cost to contain the Omicron strain amid mounting concern it will crimp the economic rebound. A study has found Omicron is 4.2 times more transmissible than the Delta variant in its early stages.
"Ultimately, the issue from a health perspective is that even if Omicron does prove to be less severe - which the initial indications so far have pointed to - a rise in transmissibility could offset that," said a team of Deutsche Bank strategists including Mr Jim Reid. That could mean that more people are in the hospital, "even if a lower proportion of them are severely affected".
Meanwhile, the global equity rally faces further potential road bumps ahead from US consumer inflation numbers on Friday and a meeting of the Federal Reserve's Federal Open Market Committee (FOMC) next week that may provide clues on the pace of tapering and interest rate increases.
"Various FOMC participants, including chair (Jerome Powell), have signalled a hawkish shift in their policy stance, catalysed by increasing discomfort with elevated inflation against a backdrop of robust growth and ongoing strengthening in labour markets conditions," said Morgan Stanley economists and strategists in a note on Thursday. "We revise our Fed call and now expect the FOMC to begin raising rates in September 2022 - two quarters earlier than our prior forecast."
Elsewhere, the US dollar was flat. It rose on Thursday after a report showed applications for US state unemployment benefits declined to the lowest level since 1969. However, economists flagged difficulties in seasonal adjustments to arrive at that figure.
In oil markets, West Texas Intermediate crude rose 0.2 per cent to US$71.06 a barrel.
Gold was gained 0.2 per cent to US$1,778.66 an ounce.
