China equities head south

US futures, China equities retreat

Wall Street had another no news is good news session, allowing the buy-everything FOMO herd to dip their toes back into the water as US yields eased slightly. The S&P 500 rose 0.70%, the Nasdaq rallied by 1.23%, and the Dow Jones added 0.31%. Aftermarket futures have seen profit-taking, the S&P 500 and Dow easing 0.10%, while Nasdaq futures are 0.30% lower.

The US futures retreat has left Asian markets stuck in neutral, except China. Across the rest of the region, early modest gains have reversed, leaving most markets slightly lower. The Nikkei 225 is 0.20% lower, with the Kospi down 0.45% as North Korea allegedly shuffles missiles around.

China markets have taken fright at the joint sanctions imposed by Western powers overnight. Adding to the gloom, Baidu’s Hong Kong IPO today has been a damp squib, the stock barely moved, and vaping giant Smoore developed a hacking cough as its shares plunged 24% in Hong Kong, with the government there announcing new regulations. Technology crackdown fears continue to persist. In totality, that has forced the Shanghai Composite down 1.20%, with the CSI 300 tumbling by 1.50% and the Hang Seng falling 1.40%.

ASEAN markets are mixed, with Singapore 0.20% higher, but Kuala Lumpur is falling by 0.65% as oil prices remain subdued. Jakarta is down 0.20%, with Bangkok unchanged. Although flooding damage may need to be priced into markets in the days ahead, Australia is equally subdued. The ASX 200 and All Ordinaries are down 0.15%.

European and UK equity markets are likely to open negatively as the rally in Asia quickly runs out of steam and reverses course. The waters will be further muddied by a statement just released by the US National Institute of Allergy and Infectious Diseases (NIAID) and reported by Livesquawk. Having reported a positive outcome for the AstraZeneca vaccine trial in the US yesterday, the NIAID has just released a statement questioning some trial data. The link to the statement is here.

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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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