Wall Street parties but Asia mixed

Asian equities mixed following the Wall Street rally

After improving Jobless Claims and a non-event US 30-year auction greenlighted the buy-everything business as usual trade, big-tech was back overnight. Although still in correction territory, the Nasdaq powered 2.52% higher, while the S&P 500 and Dow Jones ended in record territory, rising 1.04% and 0.58%, respectively.

There were concerns ahead of the US 30-year bond auction, but demand was strong enough so that the auction was passed without incident. Although the bid-to-cover ratio wasn’t spectacular, like the 10-year the day before, most of the issue went to direct buyers, not primary dealers, indicating an underlying broader demand. That was the last potential barrier for the week for simmering global recovery demand.

US futures are pausing for breath in Asia, and the region is delivering a mixed performance today, with some regional markets pausing for breath. Outperforming are the Nikkei 225 and Kospi, which have both risen by 1.20%. Taipei has climbed 0.30%, with Bangkok 0.25% higher.

Mainland China and Hong Kong are pausing for breath, though, after state-led buying saw strong rebounds in previous sessions. Threats of fines and further restrictions on Ali Baba are also weighing on sentiment in the tech sector. The Shanghai Composite is 0.40% higher, while the CSI 300 is unchanged, and the Hang Seng is 0.30% lower.

The cyclical outperformers this week in ASEAN is also seeing a mixed performance after technology’s overnight comeback. Singapore is unchanged, while Kuala Lumpur is down 0.55%, while a stronger Indonesian Rupiah has lifted Jakarta by 0.80%. Australian markets are following their masters on Wall Street. The ASX 200 is 0.75% higher, while the All Ordinaries has climbed 0.95%.

The mixed performance in Asia reflects the effects of the cyclical rotation trade prevalent earlier in the week. The state intervention in China front-running the Wall Street rally overnight. With cyclicals gaining only slightly in Asia, Europe is likely to open higher, but not set the world on fire. However, Wall Street should be set for another strong finish to the week as recovery overrules inflation fear for now.

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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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