Asian markets surprise to the upside

Asian equities start week with gains

Wall Street had a torrid finish on Friday, the major indexes all finishing down around 2.0%. That tone continued at the open this morning, with futures on the S&P 500, Nasdaq and Dow Jones falling 1.0% in early trading. The mixed bag on the China and regional PMI’s should have weighed on sentiment locally, instead of the North/South divide re-emerged. Mainland China, Hong Kong, Taiwan, Japan and South Korea markets were opening strongly higher, while the ASEAN markets in the South followed the US futures into the red.

US futures have rallied impressively since, and all three major indices are now 0.40% higher for the session. That rebound has lifted ASEAN markets as well. China’s PBOC added liquidity via the repo today with overnight rates easing, which has been equity supportive. However, the PMI’s and Japan’s impending Covid-19 state of emergency extension until early March have had zero impact.

I can only surmise that the short-term buy the dip mentality is back with force in Asia as the week starts. Although I am sure, the Reddit army will be granted credit for the rally by some. Of course, that is complete nonsense, but the supposed equity nationalism hints that this week will be a busy one.

I do note that the S&P 500 chart broke its 3-month ascending support line on Friday, closing under support at 3725.00. This morning’s rebound has seen the index rise back above that level to 3732.00, but the daily close on Friday is a technical warning sign. A second daily close under support today, once the dust settles, suggests that correction extending to the 3550.00 is imminent. I do note that my track record on picking tops in the S&P 500 is not stellar, so I will leave it to readers to decide whether my insight is brilliance or a leading reverse indicator of gains to come.

Looking at the markets right now, the Nikkei 225 is 1.30% higher, the Kospi is an impressive and confusing 2.45% higher, with China’s Shanghai Composite up 0.30%, and the CSI 300 is up 0.50%. Hong Kong has leapt 1.80%, powered by mainland retail money ahead of Alibaba’s results. Singapore is down 0.25%, with Kuala Lumpur 0.90% lower while Jakarta is now 1.50% higher. Australia’s ASX 200 and All Ordinaries are 0.75% higher.

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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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