Tentative rally by Asian equities
US stock markets staged a tail-chasing buy-the-dip rally overnight, but Asian markets, although mostly higher, have been far more circumspect. Much of the difference can be laid at the door of Covid-19. While the US is enduring surging cases, the economy continues to fire on all cylinders with their vaccination programme limiting an economic fallout. In contrast, much of Asia remains under a virus cloud compounded by slow vaccination rollouts. The price action in Asia today perhaps reflects the new realities of an asynchronous global recovery.
Overnight, the S&P 500 rose 1.52%, with the Nasdaq climbing 1.57% and the Dow Jones leaping 1.62%. Notably, the Dow Jones retraced to its March 2020 support line perfectly before rallying. Both the S&P 500 and Nasdaq remain well clear of their March 2020 support lines, and it seems that buy-the-dip remains the go-to strategy for investors on any material price dips. With the US earning’s session progressing nicely, despite being lost in the delta-noise this week, I shall not argue that point. Futures on all three indexes are hovering at unchanged in Asia.
The Nikkei 225 has risen 0.60% today, with the Kospi edging 0.40% lower after recording rising new virus cases today, raising lockdown fears. In China, the Shanghai Composite has risen by 0.60%, with the CSI 300 0.65% higher. Mainland stocks have been rock-sold this week as the blood flowed elsewhere, and I suspect that China’s “national team” have been at work this week. Hong Kong has fallen 0.50% with the China tech-clampdown and increasing credit concerns among mainland property developers capping gains.
Singapore is reinitiating virus restrictions once again, and that sees the Straits Times unchanged for the session. Kuala Lumpur is also unchanged, with Jakarta climbing 0.45% after the President hinted at easing virus restrictions. Taipei has fallen 0.30%, while Manila is down 1.50%, and Bangkok is flat for the session. Australia’s ASX 200 and All Ordinaries have ignored the Retail Sales disappointment and followed Wall Street higher, both rising by 1.20%.
European markets should open higher today despite the inconclusive Asian session. Asian markets are reflecting an asynchronous viral-recovery reality, while Europe is much further along that road, like the United States. An ECB expected to be dovish tomorrow should also support Eurozone equities today.
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