Asian equities start the week mixed

Wall Street gave no hints for the coming week, as its major indices finished almost unchanged in a directionless session. The S&P 500 rose 0.29%, with the Nasdaq creeping 0.28% higher. The Dow Jones eased by an innocuous 0.23%.

The story is much the same across Asia today. The weak data from Japan earlier has seen the Nikkei 225 ease by 0.35%, with South Korea’s Kospi falling 0.50%. Hong Kong has declined 0.55% and the Straits Times is 0.20% lower. Australian shares are slightly lower, weighed down by Covid-19 concerns. The ASX 200 is down 0.50% and the All Ordinaries is lower by 0.40%.

Mainland China has had an equally directionless start, with both the Shanghai Composite and CSI are unchanged in choppy trading. Hong Kong is likely to continue to track lower though, as new social restrictions were announced by the government over the weekend to combat its increasing Covid-19 outbreak.

Today’s session is likely to be characterised by investors taking some risk off the table, with a lack of data concentrating attention on Covid-19 risks, which appear to be rising across the region. A disappointing EU summit is likely to have the same effect on European shares this afternoon.

Investors eye tech stocks

I will dwell on the US earnings season but briefly. In a nutshell, big tech such as Microsoft and Intel should produce sparkling results this week. Tesla could make a small profit or a loss. If it makes a profit, that could see another wave of buying of Tesla stock as it edges closer to the S&P 500 entry. United Airlines also reports this week, but buying airlines, consumer discretionary, or high street retail is catching the proverbial knife. Make sure you have plenty of spare fingers.

Economic data this week is bookended by China’s Loan Prime Rate (LPR) decisions this morning and South Korea’s GDP on Thursday. Both the one and five-year LPR’s were left unchanged today. China’s approach is surgical stimulus and they remain wary of stoking asset price inflation by ‘one size fits all’ rate-cutting. South Korea’s Q2 GDP is expected to shrink again on Thursday, tipping it into its first technical recession since SARS in 2003. There is a very broad range of forecasts out there though, and thus, the potential for a positive surprise.

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