Wall Street’s rally pushes Asia upwards

Asian equities power higher as China returns

Wall Street’s rally continued into a third day overnight after the US Senate agreed to a temporary extension of the US debt ceiling until early December. The S&P 500 rose by 0.83% while the Nasdaq powered 1.03% higher, and the Dow Jones rallied 1.0% higher. Futures on all three, in keeping with the past few days, have continued their rally in Asia. Futures on all three are up by around 0.20%.

That has set Asia up for a positive start to the day with the return on mainland China markets having no particular event risk. Combined with the announcement of a post-election supplementary budget, the Nikkei 225 has leapt higher by 2.05%, although the Kospi has risen just 0.35% despite impressive Samsung earnings.

Mainland China markets have also rallied strongly on their return, with the Evergrande situation temporarily off the front pages. The Shanghai Composite has jumped 2.0% higher while the CSI 300 is up an equally impressive 1.35% in what appears to be a case of no news is good news. Property nerves are weighing on Hong Kong though after Fantasia, which defaulted this week, had trading in its bonds suspended. The Hang Seng is down 0.20% today.

In regional markets, Singapore has edged 0.25% higher while Taipei, perhaps with one eye on President Xi’s speech on Taiwan this weekend, has fallen slightly, down 0.15%. Kuala Lumpur is 0.25% higher, but Jakarta has jumped by 1.0% Bangkok is 0.65% higher with Manila soaring by 1.65%.  In Australia, the All Ordinaries and ASX 200 have climbed by 0.75%.

With the overnight rally continuing into Asia, European markets are set for another positive opening this afternoon, having ignored weak German data yesterday. We are likely to see some position squaring ahead of the US Non-Farm Payrolls data, however, and that will probably limit gains. The US non-farm payroll report is the pivotal moment of the week for markets and will give a very binary outcome if the data diverges from market forecasts of 500,000 jobs added.

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