Asia follows Wall Street south

Hawkish FOMC minutes send equity markets lower

Wall Street had a torrid session as a hawk FOMC minutes highlighted the amount of post-omicron speculative longs positions that were out there. Technology came in for particular attention, the Nasdaq suffering its biggest one-day drop in nearly a year. The S&P 500 tumbled 1.94% lower, with the Nasdaq in full retreat, falling by 3.34%. By comparison, the value-centric Dow Jones fell by only 1.05%. US yields ground higher once again overnight, pressuring highly valued technology stocks. In Asia, the story is repeating in the futures market. Nasdaq futures are 0.70% lower, the S&P 500 futures are down 0.40%, and the Dow Jones futures are 0.25% lower.

Asian markets initially held their nerve this morning, but with no short-covering in the US futures, the opposite happening, in fact, Asia’s sell-off quickly accelerated leaving the region sea of red. The Nikkei 225, highly correlated to the Nasdaq these days, have tumbled 2.86% lower. The Kospi has fallen 0.75% with neither Tokyo nor Seoul showing any additional reaction to a hypersonic missile test by North Korea today.

Mainland China sees more virus restrictions being put in place including flights, but the Shanghai Composite is only 0.15% lower. I suspect China’s “national team,” is in “smoothing. The CSI 300, however, home to a much more diverse set of companies than giant SOE’s, has fallen by 0.85%, while the Hang Seng is holding up quite well, down only 0.35%, led by gains by Alibaba and JD.com.

Singapore is also bucking the trend, the Straits Times rising by 0.50%, led by its three mega-banks and consumer discretionary. Taipei has retreated 1.20%, with Jakarta down 0.80% and Kuala Lumpur down by 0.90%. Bangkok is 1.40% lower with Manila falling 0.65%.

Australian markets, facing tighter restrictions once again under a crushing omicron caseload, and with a high beta to US markets, have suffered heavily today. Both the ASX 200 and All Ordinaries have fallen by 3.0% today.

Europe is unlikely to shrug off the negativity that has swept the US and flowed so pointedly into Asia today. Europe will open lower as will London, but I won’t rule out the buy-the-dip gnomes of Wall Street seizing their chance and turning things around on Wall Street this afternoon.

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

Latest posts by Jeffrey Halley (see all)