Asian equities race higher

Asian markets in positive territory

With the Fed taper trade alive and well, despite a shocking Non-Farm Payrolls print, US yields moved higher sending Wall Street to a soft close. The S&P 500 eased by 0.19%, while the rate-sensitive Nasdaq dropped by 0.51% with the value-centric Dow Jones finishing just 0.04%. US futures on all three in Asia took a bath earlier in the session but have recovered most of those losses to be hovering on each side of unchanged.

The recovery in US equity futures has been driven by a very positive day for the most part in Asia, with no one theme driving the rally. The Nikkei 225 has climbed an impressive 1.55% with a much weaker yen boosting exports, Covid-19 cases falling and the Japanese PM saying he wasn’t contemplating a hike in capital gains tax. South Korean and Taiwan markets are closed for holidays.

China equities are also rallying despite government officials signalling that a clampdown on monopolistic practices by big-tech would continue. E-com giant Meituan received a smaller than expected fine from the Chinese government for just that and in a classic case of no news is good news, sent the Hang Seng sharply higher, led by mainland tech giants. That seems to have lifted sentiment on mainland markets as well despite the flooding in Shanxi darkening the energy outlook. The Shanghai Composite is 0.20% higher although the narrower Shanghai 50 is up by 1.03%. The CSI 300 has climbed by 0.55% while the Hang Seng has leapt 1.80% higher.

Singapore has given back some of its travel stock-related rally after the Government announced more international vaccinated travel lanes over the weekend. But the Straits Times remains up 0.20% on the day. Kuala Lumpur is also easing movement restrictions, and combined with oil’s rally, the KLCi has risen by 0.60%. Jakarta and Bangkok are 0.30% lower but the PSEi in Manila has leapt 3.70% higher today as virus cases fall and a large shipment of COVAX vaccines was received over the weekend.

A healthy rise in commodities prices today and the official reopening of Sydney today has helped Australia overcome another gaming company scandal, which weighed on stocks earlier in the session. The ASX 200 and All Ordinaries have risen 0.65%.

European stocks are set to open in a neutral posture, Friday’s week US close offset by a strong showing by Asian equity markets today. A raft of second-tier regional data is unlikely to move the needle one way or the other. The energy crisis in the background is likely to limit gains, as will a euro that is stubbornly clinging to 1.1600 region. As is their wont of late, European markets will hitch their wagon to the direction of travel of the US markets, and it will be interesting to see if taper nerves persist. With the US bond market closed I would be on the side of a but-the-dip day which should lift European stocks later in the session.

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