Asian equities rebound on improved Wall Street sentiment
A well-received 20-year US bond auction swung the daily momentum back in favour of the bulls overnight on Wall Street, after two days of growling bears. The S&P 500 rallied by 0.93%, the Nasdaq jumped 1.19%, and the Dow Jones climbed by 0.94%.
The futures on all three indexes have retreated by around 0.15% in Asia, as various headlines about the need for vaccine booster shots and vaccine efficacy have circulated in the press. That hasn’t been enough to throw Asia’s retail fast-money day traders off their stride, though, as evidenced by the Nikkei 225 today. Having fallen over 2.0% yesterday as the herd ran for the exit door on Tokyo’s impending state of emergency, the Nikkei 225 has jumped by 2.10% today. That erases yesterday’s losses despite Tokyo still going into a state of emergency sometime next week, highlighting that speculative fast money flows, and not news, is driving short-term direction in equity markets.
Elsewhere, the Kospi is 0.50% higher, and Taipei has risen 0.80%. Mainland China’s Shanghai Composite and CSI ignore the noise yesterday, perhaps helped by national team buying. Today they remain almost unchanged as the PBOC left cash neutral, but USD/CNY slipped back below 6.5000.
Hong Kong has risen 0.40%, with Singapore 0.55% higher and Kuala Lumpur and Jakarta adding 0.45% so far this morning. Australian markets also had a modest day yesterday, and in much the same theme, both the ASX 200 and All Ordinaries are up only 0.30% today. Animal spirits in Sydney being tempered by a fall in US index futures in Asian trading today.
Over, stock markets globally continue to chop back on forth on whichever speculative momentum and sentiment is the more powerful on the day. A lack of clear new drivers has played its part with a lot of good news priced into equity valuation globally. Nerves that Covid-19 may linger for longer and vaccine effectiveness temper a buy-everything rally that is looking a little tired. All of which leads to the boisterous flip-flop price action seen this week. With the data calendar for the next two weeks chock-a-block with tier-1 data and central bank decisions, markets should find a lot more to sink their teeth into.