Asian equities track Wall Street higher

Asian markets higher but China dips

US equities broke their modest losing streak last night, as the dip-buyers could wait no longer. US yields eased slightly, and buyers pushed the S&P 500 0.23% higher and the Dow Jones 0.77% higher. Fears that the Democrats will raise corporate taxes to 25% seemed to weigh on the tech-heavy Nasdaq, which finished 0.07% lower. Given that big-tech doesn’t pay a lot of tax relatively anyway, and that saying and actually passing tax rises in the US are two totally different beasts, the negativity around the Nasdaq is probably overdone. Apple is releasing some new iPhones tonight, which should be enough to spark a tech rally.

Investors are keeping a close eye on tonight’s US inflation data, with Headline Inflation MOM expected at 0.40% and Core Inflation MoM at 0.30%. Nobody was talking about tapering and inflation after the disastrous Non-Farm Payrolls two weeks ago; but if inflation comes in higher than expected, tapering fever will evident. With markets back on inflation and tapering watch, the path of least resistance is higher prints from the data. That would likely weigh on equities.

In Asia, equities are mostly higher, except China, where Evergrande worries and the further disembowelling of Ant Financial yesterday continue to weigh on China markets. The Shanghai Composite has fallen by 0.20%, and the CSI 300 and Hang Seng are lower by 0.30%.

Elsewhere, the picture is brighter. The Nikkei 225 is 0.40% higher, with chip-makers boosting the Kospi by 0.80%. Singapore has climbed 0.35%, while Taiwan is hovering just above unchanged. Kuala Lumpur bucks the trend, falling 0.30% today, but Jakarta has risen by 0.40%. In Australia, an overnight tumble by iron ore prices seems to be weighing on local markets, the ASX 200 and All Ordinaries falling by 0.20%.

European markets shook of Asia’s nerves yesterday to open higher, and I expect they will do so again this afternoon, given the mostly positive, if quiet, Asia session.

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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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