China worries sink Asian equities

China’s Covid spike weighs on Asia markets

On Friday, US equities limped into a non-descript finish to the week as inflation fears were compounded by growth fears, notably from China. The S&P 500 fell 0.27%, the Nasdaq tumbled by 1.34%, while the Dow Jones booked a 0.40% gain as investors rotated into value for the weekend. Those same China fears, as the omicron situation darkened there over the weekend, have sent futures on all three major indexes over 0.55% lower in Asian trading.

A similar story is playing out across Asia today, compounded by China’s property developer nerves. The Nikkei 225 fell 0.75%, and South Korea’s Kospi eased 0.35% lower. Mainland China markets are under heavy pressure, the Shanghai Composite tumbling by 1.75%, with the CSI 300 in full retreat, falling by 2.35%. Hong Kong has also taken fright, the Hang Seng dropping by 2.40%.

In regional markets, Singapore is 0.65% lower, Kuala Lumpur is rather surprisingly, unchanged, and Jakarta has climbed 0.65%. The rally in Jakarta has been driven by GoTo’s IPO commencing trading, with its stock climbing 23% on debut. Elsewhere, Bangkok is down 0.45%, and Manila is 0.10% lower. The rise in platinum group metals prices seems to be providing some support to Australian markets, with the ASX 200 and All Ordinaries unchanged. However, the prospect of multiple 0.50% RBNZ rate hikes, starting this week, has sent the NZX 50 0.90% lower.

Nothing around Eastern Europe or the French presidential election will give European equities anything to cheer about this afternoon. Nor will the upcoming ECB meeting with lower risks of hiking offset by what is likely to be darkening growth projections from the ECB.

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Jeffrey Halley

Jeffrey Halley

Senior Market Analyst, Asia Pacific, from 2016 to August 2022
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley was 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 and Channel News Asia as well as in leading print publications such as 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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