Asian equities, ex-China, follow New York higher
The perpetually bullish FOMO gnomes of Wall Street sent US equities sharply higher overnight as the day’s roster of Fed speakers refused to be as bullish as James Bullard. That allowed the fast money to pile back into a hope versus reality rally as equity markets clung to the belief that the Fed has it right. Although, from my point of view, the Fed getting it right over the past year is very much a fat-tail event. Although Netflix’s share price was cremated, the S&P 500 jumped 1.61% higher, the Nasdaq leapt 2.15% higher, and the Dow Jones added 1.51%. Backing up the fast money argument, US index futures have quickly turned down in Asia. S&P 500 futures falling 0.40%, Nasdaq futures retreating by 0.80%, and Dow futures edging 0.10% lower.
The impressive overnight performance of Wall Street had been enough to lift Asian stock markets today, ignoring, for now, the fall of the US futures in Asian trading. Japan’s Nikkei 225 is 0.60% lower as the BOJ intervenes to cap JGB yields. However, South Korea’s Kospi has fallen by 0.20% as China markets head south, while Taipei has managed a 0.30% gain.
China markets were disappointed as the PBOC left the LPRs unchanged and tinkered with support measures on the sidelines. That has sent the Shanghai Composite 0.20% lower today, with the CSI 300 losing 0.45%. Hong Kong has preferred to track the overnight Nasdaq rally, gaining 0.80% in its usual exuberant retail-dominated trading. I am not ruling out some “national team” “smoothing” this afternoon if mainland equities accelerate losses.
In regional markets, Singapore has risen by 0.75%, Jakarta by 0.35%, and Kuala Lumpur by 0.80% as markets reopen there. Manila is 0.75% higher, with Bangkok rising by 0.55%. Australian and regional Asian markets have had initial gains tempered by China and a retreat by US futures. Nevertheless, the ASX 200 and All Ordinaries have booked 0.35% gains today.
European markets fell overnight as the new Russian offensive in Ukraine commenced. With the overnight feel-good factor waning in Asian trading, the war on Europe’s eastern border will dominate trading. Sustained gains by European equities will be difficult in the coming week. That reality may also permeate other equity markets as the week goes on.
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