Asia equities are mixed

Asian markets calm after US yields rise

Cyclical rotation flows dominated Wall Street on Friday, as US bond yields suddenly spiked higher. Technology bore the brunt of the assault, the Nasdaq falling 0.59%, while the S&P 500 roses just 0.10%, while the Dow Jones climbed by 0.90%. Dovish comments by Treasury Secretary Yellen over the weekend see the futures on all three indexes up by 0.20% this morning, lending a sense of calm to Asian equities.

The Nikkei 225 is 0.30% higher today, while the Kospi is now unchanged. Mainland China’s Shanghai Composite has recovered some earlier losses but is still down by 0.40%, with the CSI 300 has fallen by 0.95%. Today’s China data was mixed, and retail sentiment remains fragile. This week, it will be interesting to see if China’s “national team” steps in once again if markets move sharply lower.

Hong Kong has climbed 0.45% as the Hang Seng rebalancing starts on a modest scale today, notably with Ali Baba Health being added. Singapore has risen 0.30%, Taiwan has fallen 0.10%, while Kuala Lumpur is 0.40% higher. Australian markets are quiet, with the ASX 200 and All Ordinaries just 0.20% higher.

Some degree of cyclical rotation is evident in Asia today, much like Wall Street on Friday night. After Friday’s bond rout, the grit of equity markets today will give confidence to European stocks at their open. Overall, it appears that the rotation from tech to cyclical recovery stocks is the preferred option to any rise in bond yields for the early part of the week. Markets are likely to range for the remainder of the session in Asia.

Despite Yellen’s dovish message over the weekend and the steadying nerves in Asia this morning, I do note that sentiment of late turns on a dime in the US right now. Last Friday’s jump in US Treasury yields highlighting this risk. Although all eyes will be on the FOMC meeting midweek, do not discount US Retail Sales’ potential fallout tomorrow night. Retail Sales are expected to fall by -0.60% MoM for February and equity markets could respond negatively.

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, from 2016 to August 2022
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley was 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 and Channel News Asia as well as in leading print publications such as 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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