Wall Street climbs, Asia follows

Asian equities rise with Wall Street

The vaccine-powered global recovery, Biden stimulus, buy everything mania continued on Wall Street overnight, which powered to fresh record highs. The S&P 500 rose 0.74%, the Nasdaq leapt 0.95%, and the Dow Jones gained 0.76%. US futures are almost unchanged in Asia, meaning that the region was happy to hitch its wagon Wall Street’s momentum, albeit modestly ahead of the Lunar New Year break.

The Nikkei 225 is up only 0.05%, with the Kospi moving 0.50% higher. By contrast, mainland China is having a strong session. With the Shanghai and Shenzhen pipes to Hong Kong closed yesterday for Chinese New Year, those funds appear to have flowed back up to mainland markets. That has pushed the Shanghai Composite up 1.20%, with the CSI 300 jumping 1.45%. By contrast, the Hang Seng has risen only 0.45%.

Around Asia, Singapore has edged 0.15% higher, with Jakarta climbing 0.45%. Kuala Lumpur, Taipei and Bangkok have advanced by over 0.60%. By contrast, Australia has been hit with a wave of profit-taking, with banks and large retailers dragging the indexes lower. The ASX 200 is down 0.70%, with the All Ordinaries down 0.60%.

The buy everything trade is back with a vengeance for now, and I shall not argue with the speculative momentum. Only Chinese and US inflation numbers released tomorrow could distract markets. Unless US inflation surprises to the upside, the distraction will only be temporary. We are all back to stimulus and vaccine watching.

With most of Asia shutting down for Lunar New Year, starting with Taiwan and Vietnam tomorrow, liquidity will steadily erode in Asia, where trading appears muted already today. That will leave those markets that are still open, vulnerable to headline-driven, temporary volatility spikes. I also have a nagging fear that after the bitcoin mania overnight, retail funds may be pivoting to chase that market. The falls on Australian markets, in particular, are likely to be temporary.

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

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 and the New York Times. He was born in New Zealand and holds an MBA from the Cass Business School.
Jeffrey Halley
Jeffrey Halley

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