China worries and missile tennis weigh on Asian sentiment.
Wall Street powered higher overnight after the Empire Manufacturing Index flushed out dip-buyers from the side-lines. The S&P 500 finished 0.85% higher, with the Nasdaq rallying 0.82%, while the Dow Jones climbed by 0.71%. In Asia, futures on all three have edged 0.05% higher.
However, the strong overnight session on Wall Street has not resulted in a mechanical rally across Asian markets. It is a mixed picture today with mutual missile tests, and the ensuing sabre-rattling, sending Japan and South Korean markets lower. The Nikkei 225 is down 0.33%, while the Kospi has retreated by 0.61%.
In China, markets are also on the back foot as Evergrande concerns rise, with authorities telling China banks not to expect interest on loan repayments next week. Combined with the Macau casino inquiry and poor data yesterday, China markets are struggling today. The Shanghai Composite is 0.30% lower with the CSI 300 down by 0.40%. Hong Kong has slumped once again, falling by 1.60%.
Regional Asia is faring somewhat better, if failing to match the exuberance of the Wall Street session. Singapore has risen by 0.30%, while Kuala Lumpur and Taipei are flat. Jakarta and Bangkok have risen by just 0.10% while Manilla has climbed 0.60%. Australian markets have been boosted by climbing energy prices and a positive overnight session, with the ASX 200 rising by 0.60%, and the All Ordinaries by 0.80%.
The localised issues in Asia will not be enough to knock Europe of course, although rising energy prices, notably natural gas, may be giving markets their food for thought. Nevertheless, I expect European markets to open positively today as we wait to see what sort of mood Wall Street is in this evening. A soft retail sales number could dampen the overnight enthusiasm.
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