Asia follows US with mixed results

Asian equities mixed to finish the week

Wall Street had a volatile intra-day session overnight, with the US Retail Sales jump unwinding the intra-day recovery as Fed tapering prospects were priced in leaving a very mixed finish for the major indices. US Retail Sales for August surprised to the upside, climbing 0.70% versus an expected fall of -0.70%

The S&P 500 fell by 0.15%, the Nasdaq rose by 0.13%, and the Dow Jones fell by 0.18%. More ominously, futures have continued south today. The S&P 500 e-minis are 0.20% lower, the Dow futures have fallen 0.33% while the Nasdaq futures are unchanged. Like overnight markets, US investors appear to be rotating into the apparent safety of tech.

Asia is a mixed bag, with the Nikkei 225 seeing dip-buyers lifting it 0.55% higher. The Kospi is ignoring North Korea uranium enrichment headlines, rising a modest 0.15%. China markets are mixed as China property giant Evergrande’s shares have fallen once again today. Regulatory nerves were balanced by the PBOC injected CNY 90 bio via the 7-day and 14-day repos. The Shanghai Composite has fallen by 0.58% mirroring the Dow, while the CSI 300 has climbed 0.27% and Hong Kong is 0.38% higher.

Regionally, Singapore is down 0.15% with Taipei and Jakarta falling 0.45%, while Jakarta holds at unchanged. Another fall in iron ore overnight, along with heightened tensions with China (again), is weighing on Australian markets today. The ASX 200 is 0.90% lower, while the All Ordinaries is down 0.80%. European markets are likely to open unchanged to slightly down this afternoon after a nervous US close and a mixed day in Asia.

Taking a look ahead, next week’s FOMC meeting is the key inflection point for the taper trade now. Markets will be looking for a signal that the November meeting will be live for the announcement of the taper.

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