Equities fade in Asia

Asian markets opened slightly higher this morning as the weekend passed without incident. That rally quickly faded though with major bourses easing into the red, unable to ignore the sharp falls on US equity index futures this morning. That followed a non-descript finish to the week by Wall Street on Friday.

US futures slip on political risk

Record cases of Covid-19 in the US, a lack of stimulus progress and pre-election nerves have seen the S&P 500 e-minis retreat 0.65% this morning. The Nasdaq 100 futures have fallen 0.55%, with Dow Jones futures falling 0.75%. That has dragged Asian markets off their initial positive starts, with the Nikkei 225 now down 0.10% and the Kospi down 0.40%. China’s Shanghai Composite is 0.60% lower, and the CSI 300 is down 0.30%.

Singapore has fallen 0.15%, with Kuala Lumpur down 0.75% on political nerves and Manila down 0.25%. Taipei is clinging on to a 0.20% drop with Hong Kong closed for a holiday. Australian markets are flat after rallying initially.

Malaysian politics, two words that go together far too smoothly, was prominent this weekend. The Malaysian king declined the government’s request for an official state of emergency. In rejecting the application allowing the government to rule by decree without the need for Parliament to sit, including passing the much-delayed budget, the king also rebuked Malaysia’s politicians. In a thinly veiled warning, he basically told them all to stop jockeying for power and get on with running the country and lifting it from its recession. Elvis Presley may be the King, but the world needs more kings like the king of Malaysia. That hasn’t been enough to lift local markets though, the FKLCI fading by 0.70% today as fears of the government’s stability persist.

With so much event risk on the horizon this week, I feel that sustained gains will be hard to come by for equity markets unless a US fiscal package magically appears. Investors are far more likely, in my opinion, to take risk off the table ahead of November the 3rd.

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, from 2016 to August 2022
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley was 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 and Channel News Asia as well as in leading print publications such as 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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