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Asian equity markets slide

Asia follows Wall Street fall

A weak Wall Street close and the Huawei semiconductor ban over the weekend has set up Asia for a soft opening today. Wall Street took fright at poor US Retail Sales data on Friday, highlighting a weakening trend in the domestic sector over the past few months as Covid-19 restrictions undermine the US recovery. Industrial Production once again remained immune to the slowdown, but actually only makes up 10% of US GDP these days, with domestic consumption being 70%. A final nail in the coffin was less than encouraging earnings outlooks for large US banks, some of whom telegraphed warnings with the earnings releases on Friday.

The S&P 500 fell 0.72%, the Nasdaq retreated by 0.87%, and the Dow Jones slid by 0.57%. There was probably an element of risk aversion involved as well, as investors lightened exposure ahead of today’s US holiday and Wednesday’s presidential inauguration. Investors rotated out of equities and into the safety of US bonds, pushing US yields lower. US index futures are closed today.

Asian markets are mostly lower with the Nikkei 225 down 0.90% and the Kospi falling 1.25%. China’s impressive GDP data has lifted local markets, though, the Shanghai Composite rising 0.70% and the CSI 300 climbing 0.50% and the Hang Seng by 0.40%.

Jakarta is also bucking the trend, rising 0.50% as vaccinations start and commodities prices and demand remain firm. Elsewhere though, it is a sea of red. Singapore is 0.80% lower, Kuala Lumpur and Manila are lower by around 0.90%. Australian markets have followed suit, the ASX 200 easing by 0.90%, and the All Ordinaries falling by 0.70%. I expect European equities to move lower in sympathy this afternoon.

Markets will be acutely sensitive to headline risk, positive or negative, emanating from Washington DC this week. Either from the outgoing president or the new one. The eyes of the world are on Washington this week, and after Monday’s semi-holiday for Martin Luther King Day, it should be an eventful week.

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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