Stock markets have struggled in Asia this morning despite Wall Street’s powerful session. The S&P 500 rose 1.58%, the Nasdaq rose 2.21%, and the Dow Jones rose 1.78%. Ever eager to ignore reality, US equity investors seized on the increase in Sunbelt Covid-19 cases falling below their 7-day moving average.

It has been China leading the way, though, with the government via state-controlled media urging its citizens to go forth and buy. The rise of the Shanghai Composite and CSI 300 has been really quite breath-taking, both higher by over 5.0% yesterday. Weekly gains are equally impressive, with the Shanghai Composite 13.0% higher and the CSI 300 14.0% higher.

That trend continues today, with the Shanghai Composite up 1.40% and the CSI 300 up 1.65%, offsetting the profit-taking seen in US index futures.

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Across the rest of the Asia-Pacific, the picture is somewhat more muted. Japan Household Spending slumped yet again, falling 16.2%, a record decline. That has seen the Nikkei fall 0.40% today, with the Kospi down 0.40%

The Hang Seng coat-tailed the mainland exchanges to a 3.80% increase yesterday, officially moving Hong Kong into a bull market. However, US technology companies have declared they will not grant Hong Kong data access under their new security laws. A press conference by Hong Kong CEO Carrie Lam did little to reassure investors about the opaque nature of the new law either. That has combined to leave the Hang Seng up only 0.20% this morning.

Elsewhere in Asia, Malaysian shares are steady ahead of the Bank Negara rate announcement. The Straits Times is down 0.20% as US aftermarket index futures eased. In Australia, news that Victoria is considering imposing a new 4-week state-wide lockdown, quickly saw local equity indexes dip but quickly reverse losses, as local investors cast one eye to China’s performance. The ASX 200 is up 0.85%, and the All Ordinaries is up 0.60%.

We expect the strength shown overnight to reassert itself in Europe, with the V-shaped recovery FOMO crowd reasserting their control over short-term direction.


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