China Stocks Drag Asia Lower

Stocks edge lower in Asia

Stock markets in Asia are generally lower today after Wall Street gave up its gains after California aggressively rolled back its economic reopening measures. With China’s headline trade data outperforming, though, the fallout has been limited.

In Japan, the Nikkei 225 is down 1.0% with officials hinting that an emergency Covid-19 declaration is closer. The Kospi has edged lower by 0.50%.

China markets have had a volatile morning, with technology and financial stocks pushing the mainboards sharply lower initially. The trade data has stopped the rot for now, but the Shanghai Composite is still 1.22% lower, with the CSI 300 1.25% lower. Hong Kong was led lower by Ali Baba after news hit that Jack Ma had sold around USD 10 bio of stock. The Hang Seng index is lower by 1.70%.

Elon will hate me for saying this, but Tesla’s 40% rally over the past two weeks is making me very nervous. Partly this may have been driven (sic) by Tesla’s being a hair’s breath away from admission to the S&P 500 index. Another quarterly profit announcement is likely to seal the deal. I’ll not argue the merits of the Tesla product or business model; instead, a 35% rise in share price since June 26th suggests the FOMO-herd may be nearing the cliff’s edge. If something is too good to be true, it usually is. Before you all start yelling, I am especially noting the compressed timeframe and the scale of the rally.

In Australia, stock markets are weighed down by last night’s Wall Street retreat and rising geopolitical tensions. The ASX 200 and All Ordinaries are both 0.80% lower.

The Nasdaq traced out a bearish outside reversal day overnight, after initially rising ahead of the California news. The Nasdaq ended the session down 2.13%, with the S&P 500 falling 0.93% and the Dow Jones emerging relatively unscathed, flat on the day. Big-tech led the sell-off and should that pattern continue this evening; it would be an ominous warning sign that a long-awaited downside correction for equity markets may be upon us. Key support levels for the Nasdaq are 10518.00 and 10400.00. On the S&P 500, support is at 3100.00.

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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