Asian equities markets dip ahead of FOMC

Asia stock markets fall pre-FOMC, China stabilises

US markets finished the overnight session lower despite blockbuster US tech results, as buy-the-rumour, sell-the-fact, and some pre-FOMC risk trimming took the wind out of Wall Street’s sails. The S&P 500 fell 0.47%, the Nasdaq retreated 1.21%, and the Dow Jones eased by 0.29%. US futures on all three are unchanged in slow Asian trade.

Most of Asia has contented itself to slavishly follow the US pre-FOMC risk reduction path, notably Japan, where the Nikkei 225 has fallen by 1.05%, while the Kospi is unchanged. China markets are bucking the trend after some torrid sessions this week, showing signs of stabilising today after reports emerged this morning that the central government might introduce some new fiscal stimulus in Q3. The Shanghai Composite is 0.40% lower, but the CSI 300 has risen 0.15%, and the Hang Seng has rallied by 1.0%.

Across the region, Singapore is down 0.20%, with Kuala Lumpur down 0.10%, while Taipei has fallen 1.40% as Apple signalled chip shortages with key products in their quarterly earnings release. Jakarta is unchanged, while Bangkok has declined 0.60%. Australian markets have followed Wall Street south, not helped by a 4-week extension of the Sydney lockdowns. The ASX 200 and All Ordinaries have both fallen 0.55%.

All eyes remain on China markets, with today’s slight recovery driven by the previously mentioned stimulus hopes and the China Securities Journal stating investors shouldn’t be worried about further stock price drops. Taken in totality, it implies that China’s “national team” may be getting ready to “stabilise” markets. It is doubtful, though, that the repricing of China equities for government regulatory risk has run its course, and the rally today should be approached with caution. However, the worst of the sell-off may be past markets for now.

Along with the rest of Asia, China markets will now be on hold for the FOMC tonight. If they stay on message and remain dovish, Asian equities, including China, could see a further recovery into the end of the week. However, the Hang Seng and CSI 300 will remain up by the stairs, down by the 5th-floor window market for some time.

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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