Equities show another mixed day for Asia

Nikkei jumps but Chinese markets drifting

The return of China and Japan from holiday has seen a mixed start to the day, after Wall Street finished inconclusively, with its early tech rally petering out into modest cyclical rotation. The S&P 500 closed just 0.07% higher, while the Nasdaq retreated 0.37% at the expense of the Dow Jones, which rose 0.28%. Futures on all three has edged ever so slightly into the red in Asia after early gains. US markets also appear to be banking on a bumper Non-Farm Payrolls number, leading to recovery trade rotation on a modest scale.

In Asia, the Nikkei 225 has leapt nearly 2.0% higher as investors returned from holiday. With Covid-19 concerns still apparent, the rally is surprising. I can see no other explanation other than retail mania expecting robust US data tomorrow night. The Kospi has also rallied 0.70%, and Taiwan has rallied by 1.10%.

Mainland China’s return has been altogether more muted, with the PBOC withdrawing liquidity and G-7 statement and Australian political temperatures on the rise once again. The Shanghai Composite has edged 0.10% higher, while the CSI 300 has edged 0.10% lower. Hong Kong has given up early gains in sympathy and is now unchanged for the day.

Singapore has risen 0.56% today as its community Covid-19 situation appears to be stabilising, with the new social restrictions taken quickly in their stride. More likely, though, is that dip-buyers have appeared after a few negative sessions, boosted by an 18% rise in profits from UOB. Across ASEAN, Malaysia has fallen 1.10% which Jakarta has risen 0.45%.

By contrast, Australian markets are in retreat. The China lease of the Darwin port saga is escalating as Reuters reports a China state planner says to suspend indefinitely all activities under the China-Australia strategic economic dialogue mechanism. Both equities and the Australian dollar have fallen on this news, with Sino-Australia relations a definite sell on rallies. The All Ordinaries has declined 0.40%, while the ASX 200 is lower by 0.55%.

The lack of uniformity in Asia Pacific’s price action suggests that regional markets are positioning themselves for the US Non-Farm data tomorrow night, leading to certain randomness in the price action. The last-minute jockeying is likely to extend into tomorrow’s session.

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