Asia follows Wall Street with strong gains

Retail armies pile back into Asian equities

Wall Street abruptly reversed its early selloffs overnight on uber-dovish Powell comments, with the leading indices recovering impressive finishes. The S&P 500 rising 1.13%, the Nasdaq added 0.99%, and the Dow Jones powering to a 1.36% gain and a new record close. Notably, in the last week, both the S&P 500 and Nasdaq tested the bottom of their one-year upward channels and recovered handsomely. Buying the dip continues to remain a sound strategy if you can sieve out the schizophrenic intra-day noise.

Retail investors, and I’m sure a few institutional ones, are piling back into equities in Asia as well today, as the US fears rapidly recede. FOMO buyers have sent the Nikkei 225 1.70% higher today, with the Kospi leaping 2.05% despite the Bank of Korea holding fast on rates.

China markets have quickly forgiven the Hong Kong stamp duty increase on stock transacations. The Shanghai Composite has rallied 1.55%, with the CSI 300 climbing 1.15%. Hong Kong itself has outshone both, leaping 1.75% this morning.

Singapore is 1.30% higher, with Kuala Lumpur rising 0.65% and Jakarta rallying 0.85%. Taipei has climbed 1.05%. Australian markets are powering ahead with the ASX 200 and All Ordinaries increasing 1.0%, while New Zealand’s RBNZ fright has sent the NZX50 0.65% lower.

If nothing else, today’s price action emphasises just how much capital remains on the side-lines, ready to deploy on any material market dips. The global recovery and FOMO trump all once the day-to-day noise is stripped out. With central banks globally keeping the monetary spigots open, I, for one, won’t disagree.

Later in the day, US Durable Goods should be another reason for markets to cheer this evening, outshining US Q4 GDP Growth 2nd estimate. US Durable Goods ex Transport is expected to have recovered to pre-pandemic levels, reassuring markets that the US recovery remains on track despite the virus lockdowns and inclement weather.

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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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