Asian equities steady after US correction

Asian equities are remarkably calm this morning

US stock markets reported losses overnight, but Asian markets have not fallen suit in Wednesday trade. Stock markets across Asia are remarkably calm after the falls seen on Wall Street overnight, with most regional bourses at or near unchanged for the day. Sentiment has been boosted by a minuscule move higher by the US aftermarket futures contracts. More likely, though, the small gains shown by mainland China and Hong Kong are calming nerves.

US exchanges finally had a small corrective move lower overnight, ending a five-day winning streak. The S&P 500 fell 1.10%, the Nasdaq fell 0.86%, and the Dow Jones fell 1.51%. Covid-19 nerves have eroded confidence and caused equity markets to blink, but for now, the move looks technical and not structural.

In Asia, the Nikkei 225 and Kospi are down 0.20%, with Singapore, Jakarta and Kuala Lumpur all flat on the day thus far. China’s mainland continues to edge higher though, as retail investors assume a government back-stop after exhorting them to get long on Monday. The Shanghai Composite is up 0.70%, the CSI 300 is 0.60% higher and the Hang Seng of 0.50% higher, led by gains in Tencent.

The new lockdown of Melbourne for six weeks and the closing of the Victorian border with New South Wales, is weighing on markets Down Under. The ASX 200 is down 0.75%, the All Ordinaries by 0.30%, with New Zealand lower by 0.60%.

Covid-19 worries are genuine. All in all, the equity markets have posted an impressive rally since the dark days of March. But the fact that investors are finally acknowledging this fact is more due to the overbought nature of the short-term market and not a structural turn in sentiment. That will likely require an escalation in lockdowns across the US Sunbelt states. The solidity of Asian markets today will bring some relief to investors, with Europe likely to follow suit this afternoon.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Jeffrey Halley

Jeffrey Halley

Senior Market Analyst, Asia Pacific, from 2016 to August 2022
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley was OANDA’s Senior Market Analyst for Asia Pacific, responsible for providing timely and relevant macro analysis covering a wide range of asset classes. He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays. A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV and Channel News Asia as well as in leading print publications such as The New York Times and The Wall Street Journal, among others. He was born in New Zealand and holds an MBA from the Cass Business School.
Jeffrey Halley
Jeffrey Halley

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