Equities unwinding the “reduced operations” rally
Equity markets spent most of last night unwinding the Russian “reduced operations” knee jerk rally, as even the most ardent FOMO bull came to realise the statement didn’t amount to much. Going forward, we can still expect more of these “peace in our time” knee jerk rallies at the slightest hint of progress in peace talks, no matter how tenuous the reasoning.
The S&P 500 fell by 0.63%, the Nasdaq slumped by 1.21%, while the Dow Jones eased by 0.19%. Some short covering is evident in US futures today, perhaps assisted by lower oil prices. Nasdaq futures are 0.35% higher, with S&P futures gaining 0.10% while Dow futures are flat.
Asian markets have ignored lower oil prices today, perhaps, rightly in my opinion, regarding the falls as temporary. Weaker data from Japan and China is weighing slightly, but overall, it appears Asian markets are following the US and Europe and correcting the knee jerk rally of yesterday. The Nikkei 225 is down 0.65%, but the Kospi has edged 0.40% higher after its data outperformed. Mainland China is lower with the Shanghai Composite down 0.35% and the CSI 300 falling by 0.65%. Hong Kong has retreated by 1.50%.
In regional markets, Singapore is 0.45% lower, Taipei is down 0.25%. Jakarta and Kuala Lumpur are bucking the trend, rising 0.25% despite lower oil prices. The Sensex is unchanged in early trading, while Bangkok is down 0.10%. Australian markets are modestly lower, the ASX 200 and All Ordinaries easing by 0.15%.
Overall, the mixed data picture in Asia has been offset to some extent by lower oil prices. European markets will take some heart from lower oil as well and especially the news that Russia will allow gas payments in euros to continue for now.
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