Relief rally lifts Asian equities

Asian markets ignore US sell-off

Asian equities are mostly higher today, thanks to a wave of short-covering sharply lifting US index futures in ever thinner liquidity. Nothing has changed in the world, but the pull of buy-the-dip is stronger than anything the Sackler’s made but should also be approached with caution.

Overnight US equities followed the Asian sell-off from early Monday, finishing deeply in the red. The S&P 500 dropped by 1.11%, while the Nasdaq and Dow Jones retreated by 1.23%. In Asian trading, futures on all three have staged a sharp rally, though. S&P 500 futures are 0.60% higher, while Nasdaq futures have jumped by 0.80% and Dow Jones futures have climbed by 0.50%.

That has been enough to sucker the fast-money FOMO gnomes in Asia into action, nowhere more evident than Japan’s Nikkei 225, which has leapt 2.05% higher, whereas South Korea’s Kospi is up only 0.20%, with mainland China’s Shanghai Composite and CSI 300 unchanged. The press is suggesting that more clampdowns could be on the way, which should be a surprise to precisely nobody. Hong Kong has rallied modestly, rising 0.30%.

Singapore has risen by 0.60% with Taipei climbing by 0.55%, while Kuala Lumpur and Jakarta remain stubbornly unchanged. Manila is 0.35% lower, but Bangkok has added 0.60%. Australian markets have also joined in some pre-Christmas cheer, the ASX 200 rising 0.55%, and the All Ordinaries by 0.65%.

European investors may cautiously dip their toes back in the water, assuming US index futures maintain their gains. However, with the omicron situation darkening in the UK and on the continent by the day, I am not expecting much of a rally, if any.

The data calendar in Asia is light this week.  The action will be in the US tomorrow with some old news Q3 GDP and PCE Prices, followed by the far more relevant US Personal Income/Spending and Durable Goods for November, plus the weekly Jobless Claims, on Thursday.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Jeffrey Halley

Jeffrey Halley

Senior Market Analyst, Asia Pacific
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley is OANDA’s senior market analyst for Asia Pacific, responsible for providing timely and relevant macro analysis covering a wide range of asset classes. He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays. A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV, Channel News Asia as well as in leading print publications including the New York Times and The Wall Street Journal, among others. He was born in New Zealand and holds an MBA from the Cass Business School.
Jeffrey Halley
Jeffrey Halley

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