Asia stock markets fall

Equities slip as US Treasury yields rise

Asian stock markets are a sea of red today as higher yields ahead of the FOMC pushed US markets into the red. The S&P 500 fell by 0.76%, the Nasdaq slumped by 2.07%, while the Dow Jones finished unchanged. US futures have seen a modest rebound, Nasdaq futures rising 0.50%, but that has not translated into material support in Asian markets.

The only exceptions today are Japan, where the government and BOJ talked stimulus and easy monetary policy, which has lifted the Nikkei 225 by a paltry 0.35%. Singapore has also risen by 0.65%, potentially catching some haven flows and also coat-tailing the growth-centric Dow Jones’ robust performance overnight.

Asian markets seem more fixated suddenly on China economic nerves, despite the strong data today, and the pre-FOMC fright shown by US markets overnight. Mainland China’s Shanghai Composite has slumped 2.20%, with the CSI 300 falling 1.75%. Hong Kong has plummeted for the second day in a row, down by 2.85%.

In regional markets, the Kospi has fallen 0.75% while Taipei has slumped 1.85% as Foxconn suspended operations in Shenzhen. Kuala Lumpur is 0.45% lower, and Jakarta is down just 0.25% with Indonesia likely to be the stagflation winner in Asia initially. Manila is 0.85% lower while Australia’s ASX 200 has fallen 0.75% and the All Ordinaries by 0.90%.

European markets rallied strongly overnight on Ukraine-Russia negotiations, a rally that has lasted a couple of sessions. There is still room for more, and Europe will be boosted by the sharp falls in natural gas and oil prices, even if they can’t get it from anywhere except Russia. If the week goes on with no notable progress, I expect this momentum to wane, and a hawkish FOMC this week could stop the recovery rally in its tracks.

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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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