Asian stocks mostly lower, eyeing Fed, China omicron cases

TOKYO (AP) — Asian shares mostly declined in cautious trading Tuesday following a retreat on Wall Street.

Investors are keeping an eye on rising numbers of coronavirus cases, especially in China, where a third city has locked down its residents because of a COVID-19 outbreak, raising the number confined to their homes in China to about 20 million people.

Such disruptions can have region-wide implications for trade and other activity. Major companies, including automakers such as Toyota, had been counting on a recovery in the supply of semiconductor chips and other products from China and the rest of Asia, as vaccinations and other coronavirus prevention efforts has advanced. The recent surge in infections by the omicron variant of coronavirus has shaken such hopes.

“China continues to grapple with an uptick in COVID-19 cases, with restriction measures kicking in to contain spreads before the Winter Olympics in February. While it may still be too early to say, the risks on watch may be from any disruptions in supply chains aggravating pricing pressures or a shift in China’s zero-COVID approach,” said Yeap Jun Rong, market strategist at IG in Singapore.

Japan’s benchmark Nikkei 225 fell 0.9% to finish at 28,222.48. South Korea’s Kospi picked up less than 1 point to 2,927.38. Australia’s S&P/ASX 200 dipped 0.8% to 7,390.10. Hong Kong’s Hang Seng shed 0.5% to 23,624.11, while the Shanghai Composite index sank 0.8% to 3,564.61.

Benchmarks fell on Wall Street on Monday following a sell-off last week as investors shifted holdings in anticipation the Federal Reserve will raise interest rates this year, among other moves aimed at lowering inflation.

High inflation is taking a toll on American families, Federal Reserve Chair Jerome Powell acknowledged in remarks to be delivered at a Tuesday congressional...