Asia soars on RCEP and Wall Street

Asian equities sharply higher on Monday

The signing of the RCEP trade agreement, robust regional GDP data, and a firm finish to Wall Street on Friday have all combined to lift Asian stocks sharply today. Japan Preliminary GDP rose by 5% in Q3, well above the 4.40% expected. Japan’s economy will still contract this year, but in combination with an anticipated supplementary budget soon from the Suga administration, the damage will be smaller than anticipated.

After-market US index futures are all firmer today, with the S&P e-mini, Nasdaq 100 and Down Jones futures all over 0.80% higher.

The Nikkei 225 has jumped nearly 2.0%, boosted by supplementary budget hopes. The Kospi has rallied 1.90%, with technology leading the way. In China, the Shanghai Composite is 1.0% higher, and the CSI 300 is 0.75% higher, with Hong Kong up 0.50%.

Taiwan has risen 1.50%, with Singapore up 1,30%, Jakarta lagging at 0.10% and Kuala Lumpur up only 0.05%. Both Jakarta and Kuala Lumpur may be suffering a post-rotation hangover, given the preponderance of legacy industries in their indexes.

Australian markets had started strongly today, with the All Ordinaries climbing 1.20%, and the ASX 200 rallying 1.40%. Unfortunately, the Australian Stock Exchange has been down since 10:30 Sydney time, due to “technical issues.” Just what sort of a technical issue is the subject of much speculation.

With vaccine hopes on the rise and central banks signalling globally that monetary policy will remain ultra-easy even if a vaccine does arrive, equity markets will remain either a straight to go, or a buy on the dip. The search for yield waits for no man in a zero-per cent world. A northern hemisphere slowdown will inevitably appear in their data, probably prompting more easing by the Federal Reserve and the ECB. But Asia, comfortably orbiting China’s event horizon, seems to be moving closer to escape velocity of its own accord.

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