Asia seeing red as risk appetite slips

Souring risk sentiment sends Asian equities lower

The fast money reversed course overnight as omicron and Evergrande default headlines sent equities lower. The worst hit were the growth trades with the S&P 500 falling 0.72%, the Nasdaq tumbling 1.71% lower, whilst the value-heavy Dow Jones said, “hold my beer,” and added 0.02%. In Asia, the futures have reversed course, the Dow Jones adding 0.10%, while the S&P 500 and Nasdaq futures have risen by 0.20%.

To those negative headwinds in Asia, can be added China weakening its currency today, a hint perhaps from China that growth concerns are rising. The Nikkei 225 has fallen 0.53% while the Kospi is 0.65% lower. Mainland China markets have ignored a weaker yuan today, focusing on the Evergrande/Kaisa defaults. The Shanghai Composite and CSI 300 are 0.45% lower, with Hong Kong falling by 0.40%.

Singapore is 0.25% lower, Kuala Lumpur 0.05% down and Jakarta and Taipei retreat by 0.45%. Bangkok has eased by 0.25% and Manila has retreated 0.65%. Australian markets are also lower, compounded by headlines suggesting there will be Christmas beer shortages in the lucky country. Despite a thirst for good news, the ASX 200 and All ordinaries are 0.50% lower today.

European equities will likely open lower as well as the street takes risk of the table into the US inflation data and the weekend, which will now contain plenty of headline risk, be it omicron, China or the Ukraine, etc. The price action shows that equity markets continue to tie themselves up in knots on headline-driven price action. This is not a market comfortable, or pricing in, 7.0% US inflation or a hawkish FOMC next week. The whipsaw price action will continue, and with rising risk pressure points appearing everywhere, the odds that the FOMC next week is the straw on the camel’s back are rising.

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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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