Asian equities slump

Asia seeing red after Wall Street slides

Wall Street endured a torrid end to the quarter, posting another punchy down day although the forces of rotation were evident between growth and value in the main indexes. The S&P 500 fell by 1.16%, with the Nasdaq retreating by just 0.44%, while the Dow Jones slumped by 1.62%. We have seen rotation flows within the big three at work all of last week, which suggests to me that the market is quite indecisive about which way to point at the moment. Notably, no short-covering has occurred in Asia today, and futures on all three have fallen again by around 0.45%.

Hong Kong and mainland China are closed for holidays, but the negative forces from energy concerns, Covid, US debt ceilings, US congressional standoffs, global growth concerns, stagflation, etc., take your pick, are as evident in Asian markets as they were in US markets overnight. The Nikkei 225 has slumped by 2.0% with the Kospi tumbling by 1.40% and Taipei slumping 1.65%.

In regional markets, Singapore is 1.25% lower, while Kuala Lumpur has fallen by 0.50% and Jakarta by 0.70% after the Finance Minister signalled income tax rises on the high earners and raised sales tax. Bangkok is 0.20% lower while Manila has bucked the trend, rising by 0.35%.

An announcement by the Australian Prime Minister that Australia’s borders would reopen in November to vaccinated Australians, has had zero impact on markets down under. The ASX 200 and All Ordinaries have tumbled by 2.10% and 2.0% respectively, with Singapore iron ore futures falling by 3.70% and copper falling by 0.80%.

The dark mood sweeping markets is unlikely to reverse course by this afternoon, meaning that European equities are likely to open lower. Weak PMIs this afternoon could further dampen that mood before we see whether the buy-the-dip mafia on Wall Street chose to remain on the sidelines.

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