Asian equities seeing red

Asia can’t shake off inflation nerves

The rotation play continued to play out overnight on Wall Street quietly. The S&P 500 was unchanged, but the NASDAQ retreated by 0.58% while the more cyclical-heavy Dow Jones rose by 0.29%. Movements in the energy and commodity space explain much of the Dow Jones versus NASDAQ price action direction and why the more balanced S&P 500 was unchanged. The impressive US Retail Sales numbers, which saw a jump of 5.3% for January, appear to have been shrugged off by markets as a stimulus-driven one-off.

The grind higher in energy and commodities are weighing on Asian markets, which are perpetually hungry and beholden to both. Mainland China returned to the office today, but the initial rallies by the Shanghai Composite, and notably the CSI 300, were quickly reversed. The Shanghai Composite is now 0.55% lower, with the CSI 300 suffering a 3.0% round trip in fortunes, currently 0.85% lower for the session. The CSI 300 was dragged down by the Shenzhen components, which are enduring a dismal day at the office.

Hong Kong tells much the same story, and tentative rally, followed by a fall from grace, now 1.50% lower for the day.

Elsewhere in Asia, the Nikkei 225 has fallen 0.25%, while the Kospi is 1.0% lower. Singapore is down 0.50% with Kuala Lumpur down 0.25% while Jakarta has bucked the trend on rate cut hopes today, rising 0.45%. Australian markets are caught between an unimpressive Wall Street session and higher commodity prices. That has left the All Ordinaries and ASX 200 almost unchanged for the day.

US index futures are in negative territory, notably the NASDAQ futures, which are down 0.50 per cent. Europe, which is another considerable energy and commodity importer, is likely to follow Asia’s lead and track lower this afternoon. At this stage, though, the price action looks corrective still, with equity markets going through a cost-push inflation repricing exercise.

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 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

Latest posts by Jeffrey Halley (see all)