Wall Street rebounds but Asia mixed
It is another mixed day for Asian equities after US markets snapped a three-day losing streak overnight. With US inflation printing on target overnight, US long-dated yields fell with the US dollar, flushing out the buy-the-dip crowd and sending US stocks higher, notably in the technology growth space. The S&P 500 rose by 0.30%, the Nasdaq rose by 0.73% while the Dow Jones lagged, finishing just 0.01% higher. US index futures in Asia have continued rallying, with all three indexes climbing by around 0.35%.
That has lifted sentiment in most of Asia, with Japan markets buoyed by dovish comments from a BOJ official. The Nikkei 225 has jumped 1.34% higher with the Kospi rallying by 1.15%. China is a laggard today after a record high print in PPI stoked supply chain concerns and the PBOC only rolled over CNY 10 bio of CNY 100 bio in maturing repos today, despite setting a weaker yuan fixing. The Shanghai Composite is just 0.15% higher, but the narrower Shanghai 50 has fallen by 0.65%, while the CSI 300 has dropped by 0.30%. Hong Kong markets are closed for a public holiday.
Across the rest of Asia, markets are trading positively though. Singapore had shrugged off an unexpected MAS tightening to rise by 0.25%. Kuala Lumpur has edged 0.50% higher on profit-taking after energy prices traded sideways again overnight. Jakarta though has jumped 1.45% with Bangkok rising by 0.50%. Both continue to receive tourism reopening tailwinds.
A rise in natural gas, iron ore and copper futures today has given an additional boost to Australian markets, which were happily piggy-backing the US rally overnight. A rise in full-time employment this morning, and expectations of a reopening rebound, also lifting confidence. The ASX 200 is 0.95% higher, while the All Ordinaries has rallied by 1.15%.
European stock markets should open higher this morning following a decent performance by US and Asian markets, and a lack of market-moving headlines. Whether this proves to be a dead cat bounce for equities will depend on momentum being maintained in US markets. I am doubtful given the inflation indicators pouring in from around the world now and strong indications that the Fed taper will start as early as November.
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