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Wall Street drags Asia lower

Asia equities dip lower as investors in a cautious mood

Wall Street limped to a negative close overnight, as a lack of stimulus progress and a looming full lockdown in New York sapped investor confidence. The S&P 500 fell 0.44%, the Nasdaq rose 0.50%, and the Dow Jones lost 0.53%. The price action is hinting at a defensive rotation while markets await clarity elsewhere.

That has prompted investors to move to the side-lines in Asia, where the Nikkei 225 has eased by 0.40%, and the Kospi has fallen 0.70%. In China, the Shanghai Composite and CSI 300 are 0.40% lower, with corporate credit worries, and technology company fines adding to the temporary gloom. Hong Kong has fallen 0.85% despite the government announcing more Covid-19 support.

China’s numbers pointed upwards on Tuesday. Industrial Production and Fixed Asset Investment YoY for November rose 7.0% and 2.60%, which matched expectations. Retail Sales YoY for November come in slightly lower at 5.0%, but still a strong showing. All of the data improved over October, reaffirming China’s remarkable recovery as it leads the world out of the Covid-19 recession. The data has had no noticeable effect on China markets though, with financial markets more concerned about the recent waves of corporate defaults and a tight funding market.

Around regional Asia, Singapore has eased 0.45%, although Kuala Lumpur has risen 0.60%, led by consumer staples and energy. Jakarta is unchanged with Bangkok down 0.40% and Manila falling 0.55%. Australian markets have also eased, but dovish RBA minutes appears to have offset fears in the resource sector after iron ore prices continued falling. The ASX 200 is down 0.25%, and the All Ordinaries has declined 0.30%.

Asia appears to have moved into a wait-and-see state, ahead of the Federal Reserve rate decision on Thursday, Asian time, and more clarity of US stimulus progress. A new bi-partisan USD908 billion US fiscal stimulus proposal was released, but it remains unclear if the bill will get past the Republican-dominated Senate.

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 [4]

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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