Asia looks set to go back to the futures again this morning, in this case, the US stock index futures, to offset a negative finish by Wall Street on Friday night. Yet again, the S&P 500 e-mini, Nasdaq and Dow Jones futures have risen in Asia, after a negative finish in New York, sparing the region from worst of the Wall Street blushes. All three have climbed this morning strongly, with the S&P 500 and Nasdaq up over 0.50%.
The chief reason behind the rally was preliminary US presidential approval of the Byte Dance/Oracle deal, and the US courts overturning a suspension of the US app store ban on WeChat and TikTok, due to go into effect yesterday. Looking at the details of the Byte Dance deal, frankly, it looks terrible for the US, with Byte Dance retaining 80% of the international entity. It will raise questions as to why the US government bothered in the first place, with the answer likely being to score a win before the US election.
Whichever way you cut it, it removes a potential source of US/China tension in the short-term. In 2020, that’s as good a reason to buy everything as any other I’ve seen this year.
The week ahead is a barren one on the data front around the globe. China had just released its one and five-year Loan Prime Rate decisions, with rates remaining unchanged as expected. That is entirely consistent with their intention to stimulate the economy as needed in a much more targeted way and attempting to avoid another explosion in asset prices such as we saw post the GFC. The cupboard globally is now bare until US Durable Goods at the back end of the week.
That means we are likely to see a tail-chasing headline-driven market this week with news stories being fitted posthumously to market moves, to explain them. Activity is expected to be muted in Asia today anyway, as Japan enters two days of national holidays.
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