Asia follows Wall Street and heads higher
The buy the dip hoards returned to the fray on Wall Street overnight, with technology and energy sectors notable outperformers led by Tesla, of course. The S&P 500 rose 1.60% on the Nasdaq’s coattails, which leapt to a 2.55% gain. The Dow Jones lagging but still recording a 0.77% gain. There was a clear tech/cyclical divide overnight and repeated in Asia today, which saw similar price action yesterday.
US index futures have rallied by around 0.50% this morning, greenlighting further outperformance by the Northern Asia over cyclical ASEAN. The Nikkei 225 is 0.95% higher, with the Kospi jumping 1.40%, aided by additional domestic stimulus expectations. Mainland China’s Shanghai Composite has risen by 0.45%, with the CSI 300 climbing 0.15%. A wall of Chinese retail money has lifted the Hang Seng by 1.62%, the listing home of many Chinese tech giants. Taipei, meanwhile, has rallied an impressive 2.25%.
Singapore has climbed 0.70%, with Kuala Lumpur rising 0.85% with Jakarta up 0.25%, and Manilla rising 1.25% after some torrid sessions.
In Australia, the Reserve Bank of Australia was in the spotlight, and any thoughts that the central bank might turn hawkish were dashed. The RBA left the benchmark unchanged at 0.10% as expected. Things get interesting after that, though. The central bank has committed to buying another AUD 100 billion of government and state bonds once its present programme is completed in January. The bank added that it does not expect to hike interest rates prior to 2024. The dovish RBA and higher silver prices have listed the All Ordinaries by 1.35%, with the ASX 200 leaping 1.50%.
Equity markets have ignored a much stronger US dollar overnight, suggesting that for now, the equity correction lower has run its course. Only some serious wobbles in the US fiscal stimulus outlook or a very poor Non-Farm Payrolls on Friday are likely to knock equities off track for now, with the dip buyers firmly in control.