Buy the dip in everything should be the theme of the day in Asia after the FOMO gnomes of Wall Street spent their overnight session doing much the same thing. Market risk sentiment improved noticeably as US banking heavyweights rolled out a procession of strong earnings prints, weekly Initial Jobless Claims fell by much more than expected and US YoY and MoM headline and Core PPI rose by less than expected. Later in the session, the US Crude Inventories nudged the buy everything bulls along with official crude inventories leaping to 6.1 million barrels.
US data overnight swung sentiment back into positive territory, boosted by strong earnings from US banking heavyweights. That saw an impressive rally on Wall Street where the S&P 500 rallied by 1.71%, the Nasdaq powered 1.73% higher, and the Dow Jones climbed by 1.55%. A sign-off of the temporary US debt ceiling extension by President Biden this morning has kept the music playing, with futures on all three indexes rising 0.30% in Asia.
That pent-up buy the dip demand has, unsurprisingly, flowed through to Asian markets to varying degrees. The Nikkei 225 has jumped 1.35% higher, with the Kospi climbing 0.90%. In China, the Shanghai Composite is sounding a more cautious note, rising just 0.10%, but the narrower Shanghai 50 has climbed by 0.50 after the PBOC rolled over CNY 500 bio of one-year financing today. The CSI 300 has climbed 0.30%. Although not a stock market holiday, the Chung Yeung Festival could be impacting domestic investor volumes today. Returning from the same holiday yesterday, Hong Kong’s Hang Seng has risen by 0.65%.
Across Asia, Singapore has risen by 0.50%, while Taipei has leapt by 2,10% with Mainland China Hisense, a major consumer goods manufacturer, saying that chip shortages could last another two to three years. After benefiting from the turmoil of the last few days, some profit taking is evident in other ASEAN markets. Jakarta is 0.20% lower, with Kuala Lumpur unchanged and Bangkok edging down by 0.25%. Manila continues a stellar week, rising by 0.45%. India markets are closed today for a national holiday.
Australian markets, set to rise after the overnight rallies anyway, received a boost that NSW will scrap all quarantine requirements for vaccinated incoming international travellers from November 1st. That continues notable trend of loosening border requirements seen by ASEAN countries this week. The ASX 200 and All Ordinaries are 0.50% higher.
The usual end of week/weekend risk concerns are tempering gains in much of Asia, the ever effervescent retail-driven Japan markets the usual exception. Nevertheless, with the recovery in risk sentiment in New York continuing through Asia, European markets should happily follow-the-leader and start this afternoon’s session on a positive note. Assuming there are no negative data or headline surprises from the US this evening, there should be no reason for equity markets not to end the week on a positive note in New York.
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