Taper trade sees mixed results in Asia

Powell renomination weighs on Wall Street

Wall Street had a torrid session overnight as US long-dated bond yields jumped higher after the renomination of Jerome Powell as Federal Reserve Chairman. Rate-sensitive technology stocks slumped pushing the Nasdaq lower. Meanwhile, banking stocks rose in sympathy with a steeper yield curve, which bodes well for future profitability, while a rise in commodity and oil prices boosted the mining and energy sector. The S&P 500 fell by 0.32%, with the Nasdaq retreated by 1.26% as the Dow Jones edged 0.05% higher. Futures on all three are almost unchanged in Asia.

With Japan on holiday today, the price action in US markets is being broadly repeated in Asia. Tech-heavy indices are suffering while those with more traditional resource, banking and property weightings are holding their own. South Korea’s Kospi is down 0.45% with Taipei falling by 0.35%.

Mainland China sees the Shanghai Composite rising by 0.35%, aided by reports of renewed lending to the property sector. The more tech-centric CSI 300 remains unchanged though. Hong Kong has seen locally listed mainland China tech-titans sold heavily, pushing the Hang Seng down by 0.75%.

In regional markets, Singapore has eased by 0.10% with Kuala Lumpur edging 0.15% lower and Jakarta easing by 0.30%. Bangkok has risen by 0.15% with Manila jumping by 0.65%. In Australia, the rise in US yields overnight, and rallies in oil, iron ore and coal, have lifted the bank and resource sector. That has pushed the All Ordinaries 0.55% higher, while the ASX 200 has rallied by 0.75%.

The Covid-19 hangover in Europe is likely to continue today, although a lower euro should take the edge of exporters. Weaker than expected PMIs from Germany and France could well deepen the malaise and raise fears that the European recovery faces a number of challenges.

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