Asian stocks stage North Asia/ASEAN split
On Friday, Wall Street ignored the inflationary noise of the Non-Farm Payrolls, choosing to take the broad-based jump in jobs as a sign of accelerating recovery, and duly sent equity indexes to record-high closes. With momentum clearly with buy-everything on anything FOMO camp, the S&P 500 rose by 0.37%, the Nasdaq rose by 0.20%, and the Dow Jones rose by 0.56%. Pfizer’s oral Covid-19 treatment boosting the S&P 500, while a loosening of US travel restrictions starting today, and the passage of the infrastructure bill, played well with the Dow.
In Asia, however, the picture has not been nearly so clear cut. Saudi Arabia’s decision to raise crude prices in December to Asian customers by another USD 1.40, much higher than the USD 0.50 to USD 1.0 range expected, has not played well with the North Asia heavyweight. Additionally, JP Morgan has cut its China growth forecast once again, Evergrande has not made another payment, and S&P 500 and Nasdaq futures have given back all of Friday’s gains this morning.
That has left Asia in its usual North/South split with Northern heavyweights slipping, while investors have flocked to the more resource-centric ASEAN markets. With S&P 500 futures falling 0.22%, and Nasdaq futures falling 0.40%, Japan’s Nikkei 225 has edged 0.20% lower, with South Korea’s Kospi tumbling by 1.0%, although Taipei has risen slightly by 0.20%.
In China, today’s rise in oil prices also weighs along with the procession of negatives I have outlined above. The Shanghai Composite is unchanged, while the CSI 300 is down 0.20% and Hong Kong by 0.50%. Beware of false dawns this week in China equities. As with the Central Committee in progress, I fully expect China’s “national team” to be “smoothing” any equity negativity by buying any dips in prices.
As usual, these days, a down day in North Asia seems to cause a rotation into ASEAN markets, where heavyweights such as Indonesia and Malaysia have a resource beta. The rise in oil prices has lifted Jakarta by 0.50%, with Kuala Lumpur climbing by 0.20% and Singapore rising by 0.50%. Manila has jumped by 1.05%, with Bangkok up by 0.25%. Australian markets are treading water to start the week, with a robust weekly finish by Wall Street and further reopening measures offset fixed-rate mortgages rise and base metal price falls. The ASX 200 and All Ordinaries are unchanged for the session.
Brexit and Northern Island nerves, and a weak performance by US futures in Asia, are likely to weigh on the UK and European markets this afternoon. However, given Wall Street’s religious zeal-like faith in Jerome Powell’s read my lips, no rate hikes mantra, it is hard to see the negatively seen in Asia, dragging down North American markets.
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