Asian equities take their cue from higher US markets
Asian equity markets are set for a healthy day today after the great rotation trade sweep European and American stock markets overnight. Nowhere was that more evident than the scores on the doors of the US major indices by the session’s end. The S&P 500 rose 1.17%, the tech-heavy Nasdaq fell 1.53%, but the legacy industry-laden Dow Jones rose 2.96%.
With Asian stocks markets, for the most part, more closely resembling the Dow Jones than the Nasdaq, regional Asian markets are set to outperform today. The Nikkei 225 has risen an S&P-like 1.10%, boosted by a much weaker yen overnight. The Kospi has risen a mere Nasdaq-like 0.25%, as has China’s CSI 300. The Shanghai Composite has edged 0.40% higher.
Hong Kong has risen 1.10%, while Singapore’s Straits Times, chock-full of legacy industry stocks – sorry, I meant cyclical value stocks – has leapt by 2.90%. Kuala Lumpur has risen by 0.70%, but I expect to play catch-up to Singapore, as will Jakarta, up 0.40%.
Australian markets, laden will bank and resource sector heavyweights are also outperforming. The All Ordinaries is 2.0% higher, while the ASX 300 has risen 1.80%.
After the initial fast money rush when the Pfizer announcement came out last night, some profit-taking was evident later in the New York session. It is hard to see big tech taking a beating for too long, as underlyingly they have strong businesses printing mountains of cash and strong competitive positions. More than likely they remain buys on dips. That said, the value side of the market should continue to enjoy its days in the vaccine sun even if the pace of gains slows. Other vaccine candidate updates in the coming month should ensure cyclical value receives regular booster shots. The buy everything trade, powered by unlimited free central bank money continues, it just may be less tech-centric going forward.
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