China reopening boosts Chinese equities
Higher US bond yields took the edge of Wall Street overnight, which was happy to tail chase the China reopening trade higher, especially as US-listed China equities performed very well. That left Wall Street closing modestly higher. The S&P 500 rose by 0.31%, the Nasdaq gained 0.40%, and the Dow Jones added just 0.07%. In Asia, US futures have continued falling, and all three major indexes are down 0.40% this morning, although that is not translating into universal negativity in Asian markets.
Asian markets are mixed once again, with the growth-centric North Asia heavyweights doing well, for the most part, while the more value-orientated ASEAN markets are once again struggling, perhaps unnerved by USD 120.00 oil. The slumping yen has seen Japan’s Nikkei 225 rise by 0.60% today, though South Korea’s Kospi has fallen by 1.35% as it plays catchup to Friday after being on holiday yesterday. Taipei is also struggling, edging 0.40% lower.
In mainland China, the reopening trade remains at full strength, with US-listed Chinese equities pricing in the worst is over overnight as well. That has been helped along by the belief that China has reached “peak-crackdown” on its tech giants. We shall see. The Shanghai Composite has risen by 0.50% today, with the CSI 300 climbing by 0.65%. Rather surprisingly, Hong Kong’s Hang Seng is almost unchanged, edging 0.10% lower.
In regional markets, the rise of both oil and US yields appears to be weighing on sentiment. Singapore is 0.20% lower, while Kuala Lumpur has fallen by 0.50%. Jakarta has unwound some of yesterday’s losses, climbing by 0.50%, with Bangkok dropping by 0.80%, with Manila adding 0.15%. Australian markets are retreating ahead of the RBA policy decision in what appears to be a defensive move against a hawkish surprise. The ASX 200 and All Ordinaries have fallen by 0.90%.
European markets jumped on the China reopening trade overnight, along with the possibility that Russia might “allow” Ukrainian wheat exports. Germany and France’s leaders should probably ask the Ukrainians first though. That rally is unlikely to be repeated today with higher US yields spurring an equity retreat in the US overnight, and US futures mired in the red this morning in Asia.
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