Asian stocks quiet, EU Summit looms

Asian equities are mixed today

Asian equity markets are painting a mixed picture today following a modestly negative New York session. For the most part, the major indices are trading each side of unchanged. Most of the attention has been on mainland China, where the Shanghai Composite and CSI both fell by over 4.0% yesterday afternoon. With mainland markets dominated by retail investor flows, they are, by their nature, vulnerable to the direction of the stampeding FOMO-retail herd. Yesterday looked like a capitulation of the long positioning piled into after the state media organisations urged investors to get long the week before. The joys of a command and control economy.

Today, however, things appear much more orderly on the mainland. The Shanghai Composite and CSI 300 0.30% higher in quiet trading. Over in Japan, the Nikkei 225 has edged lower by 0.25%, while Seoul’s Kospi is up 0.50%. The Hang Seng is also 0.50% with the Straits Times 0.20% higher after the rebound in non-oil exports. Malaysia has risen 0.60% with Australian markets unchanged on the day.

Overall, short-term flows appear to be dominating Asian markets with no overriding theme apparent. Investors seem to have one eye on the door for the weekend. We would expect much the same to be evident in European markets ahead of the EU leaders summit later today.

Equity markets had already fallen before all the data came out, so we should avoid fitting facts to explain the price action. The price action overnight looks like nothing more than a loss of momentum and a benign stall. Asset markets have plenty of central banks induced altitude to recover from the mild stall and modest dive. That is what Asia looks like it is doing today. Some days, a gentle recovery to straight and level is just what it says on the tin, no conspiracies necessary.

The data calendar in Asia today is very quiet, as it is across Europe and the United States. Earnings season has passed without incident this week and looks set for much of the same this evening.

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