Asian equities stage a technical rebound

Asian markets rally on Powell comments

Asia-Pacific equities are staging a relief rally today after Wall Street stabilised late in the session as Jerome Powell calmed nerves over potential 0.75% rate hikes. The rebound of cryptos and stable coins also lifted sentiment. Overnight, the S&P 500 closed just 0.13% lower, the Nasdaq rose 0.06%, and the Dow Jones fell by 0.28%. Given the losses intraday, that was an impressive finish. The rally is continuing in Asia, with futures on all three recording strong gains. S&P 500 futures are 0.70% higher, Nasdaq futures have jumped by 1.0%, and Dow futures have climbed by 0.55%.

The almost unchanged finish overnight, and the rally by US futures this morning, are lifting Asian equities. Japan’s Nikkei 225 has jumped by 2.55%, while South Korea’s Kospi has gained 1.65%. Despite Shanghai restrictions extending once again, Mainland China equities are also rising. The Shanghai Composite is 0.65% higher, with the CSI 300 rising by 0.55%. Meanwhile, the Hang Seng has rallied by 1.75%.

Regionally, Singapore is 1.40% higher, with Taipei gaining 1.25%, Kuala Lumpur 0.45%, but Jakarta has lost 0.75% after retail sales disappointed yesterday. Bangkok is closed today, while Manila has edged 0.25% higher. Australian markets are performing well, the All Ordinaries and the ASX 200 rallying by 1.30%.

Nothing has materially changed in the world from yesterday, and if anything, Russia/Europe risks are increasing. The rally today looks more like a technical rebound after a torrid week, than a structural turn in sentiment. As such, it should be taken with a grain of salt.

European markets fell overnight with the euro as Russia announced sanctions on some European gas importers. Finland is expecting much the same treatment as soon as it announced formally it will join NATO. The weaponisation of natural gas by Russia towards Europe was always the single biggest threat to the Eurozone. With that process starting, European equities will struggle to maintain rallies, even if markets elsewhere manage to do so.

On a final note, I am heading to Singapore next week for the first time in nearly 2.5 years. It is a holiday in Singapore on Monday, my daily missive will resume on Tuesday.

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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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