Asian equities take risk off the table
The loss of momentum on Wall Street overnight was enough to tempt Asian investors to book profits this morning, with regional markets mostly lower. On Wall Street, the S&P 500 and Nasdaq were almost unchanged, with the Dow Jones creeping 0.11% higher. Futures on all three have edged higher in directionless trade this morning.
In Asia, the Nikkei 225 has fallen 0.61%, with the Kospi down 1.0% despite news that Apple is nearing a car production deal with Hyundai-Kia. In China, the Shanghai Composite has fallen 0.55%, with the CSI 300 down 0.65%. Profit-taking is evident in Hong Kong as the Hang Seng slides by 1.60%. The creation of a financial holding company to house Ant Financial could be weighing on sentiment, as its growth prospects are likely to be lower under that regulatory regime.
Singapore is down 0.45% with Kuala Lumpur 0.11% lower and Taipei flat for the day. Jakarta is bucking the trend, rising 1.0 today with Bangkok also 0.25% higher. Australian markets have ignored the trade data and headed South. The ASX 200 has fallen 0.70%, and the All Ordinaries is 0.40% lower.
Overall, the markets in Asia today have a pre-Non-Farm-Payrolls risk reduction look about them, after strong gains earlier in the week. That sentiment is likely to flow into Europe as well, with UK markets the most likely to buck the trend after the BoE policy decision.
In the eurozone, there was a positive development, as inflation data climbed higher, with both core and headline inflation outperforming. Core Inflation YoY rose an impressive 1.40% versus 0.90% expected. Headline Inflation YoY rose to 0.90% versus 0.50% expected. Much of the increase in core inflation can be attributed to the VAT cut’s reversal in Germany. Elsewhere, higher oil prices are making their presence felt, and this will be a continuing trend in 2021. Services prices rose, reflecting logistical logjams and higher transport costs due to energy.