Asian equities track New York higher

Wall Street climbs overnight

European and US equities performed strongly overnight, boosted by end-of-month portfolio rebalancing from institutional investors. That dragged in the buy the dip crowd and saw the S&P 500 rise 1.61%, the Nasdaq climb 1.87% and the Dow Jones rose 1.53%. Asian stock markets are mostly higher, although they are failing to share Wall Street’s exuberance with one eye on tonight’s first US presidential debate. Investors will get a close-up look at President “Tax-Return” take on Democrat candidate Mr “Sleepy-Joe” Biden.

The Nikkei 225 has edged lower by 0.36%, driven by 1000 TOPIX listed stocks going ex-dividend today. Elsewhere though the picture is positive. The Kospi has risen 0.90%, with mainland China’s Shanghai Composite rising 0.40% and the CSI 300 rising 0.30%. The Hang Seng is unchanged, while Singapore is up 0.15%. Meanwhile, in Australia, the All Ordinaries has climbed 0.75%, and the ASX 200 is 0.10% higher.

With the end of the month and the quarter upon markets, a lot of portfolio rebalancing is occurring in the institutional investor space. I would suggest that those flows, rather than a sudden “the world is saved” epiphany are the genesis of the overnight equity rally. That appears to have dragged in the FOMO buy the dip mob on a day when nothing materially changed in the world to justify the moves. US airline stocks, in particular, and banks, had an exceptional day. A session where the buy everything mob think airlines look cheap is as good a warning sign for the longevity of the overnight rally as I’ve ever seen. At least big tech is cashflow positive, even if they are not cheap.

The ex-dividend effect in Tokyo may also be muting gains in other regional markets. Impending holidays across much of Northern Asia will also dampen activity.

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 and the New York Times. He was born in New Zealand and holds an MBA from the Cass Business School.
Jeffrey Halley