US, Asian markets gain ground
Asian equities are in the green today after an impressive session on Wall Street. In contrast to the end-of-days naysayers in currency markets, Wall Street took an expected uber-dovish Fed as a reason to buy more of everything, assisted by US yields edging lower as well.
The S&P 500 rose 0.74%, the Nasdaq jumped 1.67%, and the Dow Jones rose 0.44%. Although the world is in love with the Nasdaq and big-tech, I wish to highlight a cautionary note that should be on investors’ radars. I noted a bearish outside reversal day on the Nasdaq early in July. That did not play out, but it was the all-time high of the index. Its subsequent bounce topped at precisely the same level, forming a double top at 11,071. The Nasdaq is presently at 10,720, and a failure to recapture 11,071 will be a significant warning shot across the bows. I am not calling the top in equity markets, but readers should pay attention to this technical development.
Fitch has reaffirmed China’s sovereign debt ratings at A+ with a stable outlook. They note that China is staging a remarkable recovery and have robust external finances. That should give a booster shot to mainland and regional equity markets this morning.
In Asia, the markets are serenely in positive territory. The Nikkei 225 is flat on the day, but mainland China’s Shanghai Composite and CSI 300 are higher by 0.55% and 0.95% respectively. Hong Kong has climbed 0.50%. On regional markets, Kuala Lumpur is now 1.0% higher following the Najib verdict, with Jakarta up 0.65% and Singapore up 0.45%.
Equity markets should continue to perform well with only headline risk and not data risk to cause a sudden change in the narrative. A weaker US dollar, improving data ex-USA, and renewed lower rates for longer vigour, should continue to support the rally into the FOMC decision.
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