Asian markets mixed
Wall Street had a schizophrenic session overnight, falling hard for most of the day as markets continued winding themselves up that the Federal Reserve could tighten by as early as March, amid escalating inflation concerns. It is very much a short-term phenomenon though, as US inflation break evens all the way from 1 to 10 years are still pricing in a return to a 2.0% inflation nirvana. Markets rallied sharply for no apparent reason near the end of the session hinting that fast-money flows are dominating at the moment. The S&P 500 finished 0.14% lower even as the Nasdaq unwound over 2.0% intraday losses to finish 0.05% higher. The Dow Jones suffered a late value to growth rotations, falling 0.46%.
In Asia, it is another mixed day once again with the value-centric ASEAN markets outperforming. With Japan returning from holiday today, the Nikkei 225 has played catchup as it falls 0.93%. South Korea’s Kospi by contrast, has eased just 0.15%, with both Japan and South Korean markets ignoring yet another North Korean missile test this morning.
In China, upward momentum quickly faded and reversed as Covid-19 restrictions were tightened once again in some Chinese cities, notably Zhengzhou today. With China showing no signs of opening the stimulus floodgates, swirling virus nerves and property sector concerns, local markets are struggling to maintain any sort of upward momentum. The Shanghai Composite is 0.45% lower, while the CSI 300 is down 0.75%. Hong Kong has gained a temporary respite from the latest Evergrande debt rollover, but the Hang Seng is still only 0.15% higher.
Singapore is 0.45% higher today as it continues to be a defensive play versus Northern Asia with investors still wanting Asia exposure. Taipei, Jakarta and Kuala Lumpur are 0.25% higher, with Manila down 0.15% while Bangkok has climbed 0.45% higher. A weak and nervous New York session, and spiralling omicron cases Australian markets sharply lower today. The All Ordinaries and ASX 200 have tumbled by 0.80%.
Europe should open neutral this morning and I believe markets there will remain more focused on movements in German Bund yields than noise from Wall Street.
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