Asian equities follow Wall Street higher

US Manufacturing PMI sends US and Asia markets higher

The impressive outperformance by the US Manufacturing PMI overnight, rising to 59.3, lifted pre-election spirits on Wall Street. The data was all the more impressive with all the sub-indexes also outperforming, hinting that the US recovery is navigating the Covid-19 storm. The S&P 500 leapt 1.23%, the Nasdaq rose 0.42%, and the Dow Jones rallied 1.52%.

Asia and Europe mostly outperformed, with China and Germany all posting strong PMI data. That was enough for Wall Street to put election jitters behind them and load up again on equities and pro-cyclical risk assets. However, a huge caveat for Germany and Europe now will be the new Covid-19 lockdowns. I expect that the “risk-on” tone of the overnight session is likely to run out of steam today, however, as the US polling booths open. I still see the potential for short-term equity weakness.

The Wall Street rally has lifted Asian stock markets, which are rising for the second day in a row. The Nikkei 225 has jumped 1.40%, after an impressive rally yesterday. On further consideration, Japan equities may be benefiting from haven flows ahead of the US election. The Kospi has leapt 1.85%, with the Shanghai Composite and CSI 300 up 1.40%.

Meanwhile, the Hang Seng has leapt 2.25%, probably on Ant Financial IPO fever, with the shares allegedly trading 50% above the IPO price in the grey market ahead of official trading on Thursday. Taipei is 1.10-% higher with Singapore 1.20% higher, while Kuala Lumpur lags, flat for the day ahead of the Bank Negra Malaysia rate decision and the 2021 budget on Friday.

Australian markets have also leapt ahead after the RBA rate cut. The ASX 200 and All Ordinaries are 2.0% higher today.

The powerful move higher in Asia hints at the latent demand and FOMO-ness still out there in global equities. Although further gains ahead of the election will be elusive, if the US election passes relatively smoothly, the “buy-everything” trade will be back with a vengeance.

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
Jeffrey Halley

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