Asian equity markets are cautiously higher

Asian equity markets are cautiously higher this morning ahead of a barrage of holidays next week. Although US index futures have fallen in Asia today after Amazon and Apple fell in extended trading, regional markets clearly fell the outsized gains in the official Wall Street session overnight outweigh those risks for now.

US futures fall after earning reports

Wall Street rallied powerfully in the official session as the tail-chasing FOMO gnomes decided that the world wasn’t going to end, despite changing their minds on that point numerous times this week. The S&P 500 rallied an impressive 2.54%, with the Nasdaq leaping 3,.4% higher, and the Dow Jones climbing by 1.86%. The earnings miss by Amazon, and forward outlook warnings by Apple and Intel have seen US futures fall in Asia, but not by as much as they rose in the official session. S&P 500 futures are 0.45% lower, with Nasdaq futures shedding 1.10%, while Dow futures are unchanged.

In Asia, Japan is on holiday, but South Korea’s Kospi has gained 0.72%, with Taipei rallying by 1.0%. In China, the removal of coal import duties and a move to halve stock transfer fees in Shanghai have had a minimal effect. Any gains are being weighed down by China officials reiterating their Covid-zero policy and Beijing schools being closed early to help prevent the virus spread there. Weekend PMI data and holidays next week are also muting activity. The Shanghai Composite is just 0.37% higher, and the CSI 300 is unchanged, but Hong Kong’s Hang Seng has followed the US rally and jumped by 1.80%.

In regional markets, Singapore has gained 0.75%, Kuala Lumpur is 0.10% higher, while Jakarta had added 0.45%. Bangkok is 0.25% higher, and Manila has slumped by 1.30%. Australian markets have followed the Wall Street session, albeit with less exuberance after the Amazon/Apple results. The ASX 200 and All Ordinaries have gained 0.70% today.

European markets rose yesterday in sympathy with New York and perhaps because of the capitulation on rouble payments by large energy companies. Whether their political masters allow that to happen is another thing altogether, have signalled they will be breaking sanctions if they do. Additionally, a European oil import ban on Russia seems to be coming closer with oil prices rising overnight, with Germany and Hungary seemingly moving into that camp now. That is likely to limit gains on European markets which also face the usual weekend risk as well as a slew of GDP data today.

I am taking the rally today in Asia with a grain of salt as month-end flows may be distorting the true picture. Similarly, readers should apply the same scepticism to large moves in European and US markets this afternoon, although with Wall Street off its schizophrenia medication this week, anything could happen there.

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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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