Asian equities march higher

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.

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
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley is 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, Channel News Asia as well as in leading print publications including 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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