Asian equities move higher in early trade

Asian stocks start week with gains

Wall Street fell on Friday, weighed down by US-China relations. All three major indices fell as investors used geopolitics as an excuse to lock in pre-weekend profits. That has been consigned to history this morning, with positive China data and pandemic relief progress from Washington DC lifting most regional stock markets.

The Nikkei 225 is the exception. Playing catchup to last week after a two-day holiday, the Nikkei 225 has edged 0.50% lower. It is all go elsewhere, though, with mainland China’s Shanghai Composite and CSI 300 both higher by 1.0% this morning. Hong Kong has also risen 0.30%.

Around the region, Singapore, Jakarta and Kuala Lumpur have all risen 0.20%. Gains in Malaysia will be limited ahead of the first court rulings on the former Prime Minister’s many corruption cases tomorrow. The settlement between Malaysia and Goldman Sachs over 1MDB-related matters having no noticeable impact on local markets today.

In Australia, stock markets have been muted by the rising Australian dollar, and the continuing rise in Covid-19 cases in Victoria State, with officials stating, they will need more than six weeks initially mooted to bring the outbreak under control.

Asian stock markets will continue to gratefully ignore geopolitics today, remaining in the green. That should spill into European stock markets, which endured a torrid finish to last week. A fall in the pace of US Covid-19 infections and deaths should also lift spirits. Stock markets may get a further boost as more details of the US Republicans’ proposed follow-on stimulus package are released.

We have a slew of big-tech earnings reports later in the week from Apple, Amazon, Alphabet and Facebook. It presents the main risk to the bullish market sentiment, in my opinion. The S&P 500 rally has been skewed by the amount of cash poured into the FAANG+ stocks, increasing their weighting in the index. Their supposedly pandemic-proof business models have driven that. Although I am not expecting any earnings wobbles if, for some reason they do, that could be enough to stop the buy-everything recovery rally in its tracks.

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