Asian equities are modestly positive despite weaker China trade data.
On Friday, blockbuster US jobs data put the economic recovery back on track with investors and saw the S&P 500 and Dow Jones finish higher while the pandemic-darling Nasdaq eased slightly. The S&P 500 rose 0.17%, with the Nasdaq falling by 0.40%, while the Dow Jones climbed by 0.41%. To put it in context, though, all three major indices remain at or near record highs.
US index futures have eased in Asia, with Nasdaq futures notably down by 0.35%. That has not dampened spirits in Asia, where a Japan and Singapore holiday has thinned out the trading volume. Investors are focusing on China, where the weakness in the weekend trade data has seen commodity prices, notably iron ore, fall today. It has also raised expectations that China will look to ease monetary conditions or enact more stimulus as the week import data raise fears that domestic demand is falling.
That sees China’s Shanghai Composite rising 0.85%, with the CSI 300 climbing by 0.80% and the Hang Seng jumping by 1.15%. The rally in China has lifted regional equities slightly, offsetting the taper nerves from the US and Asia’s ongoing pandemic woes. The Kospi is just 0.10% higher, while Taipei has followed the Nasdaq South, falling by 0.50%. However, Kuala Lumpur is 0.45% higher, with Manila jumping 0.80% and Bangkok rising 0.65%, with Jakarta 0.20% higher. Australian markets are also cautious with lockdowns extending to regional New South Wales today. The ASX 200 and All Ordinaries are just 0.10% higher.
China regulatory risk has not gone away and is likely to limit the cautious gains today, which will also cap gains in regional markets. Pandemic nervousness will also temper spirits, particularly in China, where a rapid spread of the delta variant would be a game-changer for the region’s recovery outlook. Today’s fall in iron ore and other base metal prices may also only be temporary.
European markets will likely open unchanged to slightly lower, with falling China Imports rattling some nerves in Germany in particular. That will be, to some extent, offset by the fall in the Euro on Friday, making Eurozone export pricing more attractive. With a thin calendar in Europe and the US, markets will likely spend the session chasing their tails on news headlines.
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