Asian stock markets rise on China data

China manufacturing data beats forecast

Asian equities had a nervous start on US election uncertainty, and national lockdowns in Europe announced over the weekend. All was quickly forgiven when China produced an impressive Caixin Manufacturing PMI. Surprisingly, Japan was an outperformer, perhaps boosted by government comments confirming talks with China about easing travel restrictions. Bubbles aren’t usually good for markets unless they are travel bubbles.

US index futures are all higher, led by the S&P 500 e-minis which have risen 0.40%. The Nikkei 225 has rallied 1.40%, with a weaker yen and an improving PMI also helping sentiment. The Kospi is 0.90% higher, but China’s initial rally has faded quickly. The Shanghai Composite is down 0.40% and the CSI 300 is now unchanged.

Hong Kong has risen 0.70%, with Singapore higher by 0.60%. Taipei has followed the mainland 0.30% lower with Kuala Lumpur down 0.90% ahead of political risk this week. Jakarta is flat, and Manila has risen 1.10% as the super-typhoon passes. Australia’s ASX 200 and All Ordinaries have advanced 0.35%.

Investors should perhaps take their cues from China’s markets today, where the PMI-induced rally has quickly faded. That warning sign suggests that spikes higher in equity prices are just that, spikes. None of the event risks of last week has magically gone away. If anything, it has increased. Bullish exuberance remains a dangerous game to play this week.

The US election is the highlight of the week, with results rolling in across Wednesday in Asia. Although the headlines and opinion polls continue to focus on the presidential race between Trump and Biden, I maintain that the Senate race is the crucial one and will have the most impact on markets. A Republican Senate will be an immediate negative, but probably the best outcome for equity markets longer-term. If the fiscally conservative Republicans keep control, massive fiscal stimulus and a significant tax hike will be off the agenda in this scenario.

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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