Wed, Jun 23, 2021 @ 12:14 GMT
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Asian Equities Edge Higher

Asia in cautious mood, eyes US GDP

Asian equities continued to trade with a cautiously bullish bias, with one eye on US GDP this evening, after the FOMC stayed on message but was ever so slightly less dovish. Notably, US index futures are rallying powerfully in Asian trading after blow-out Apple and Facebook results and after President Biden’s address to Congress passed without incident. Yet, Asian markets are refusing to join in.

On Wall Street overnight, a slightly less dovish FOMC statement if you looked very closely word-for-word pushed markets lower. The S&P 500 finished almost unchanged at 0.08% lower, the Nasdaq slid 0.28%, while the Dow Jones fell by 0.48%, weighed down by Boeing woes. All has been forgiven in Asia, though, with S&P futures rising 0.60%, Nasdaq futures leaping by 0.95%, and Dow Jones futures rising 0.30%. The US earnings deluge continues today, although all eyes will be on Amazon’s results. If this week’s form continues, a result close to expectations will see Amazon stock fall, while markets will reward a strong earnings beat.

In Asia, the Nikkei 225 and Kospi are 0.30% higher while China’s CSI 300 is up 0.20%, with the Shanghai Composite unchanged. The Hang Seng is 0.65% higher as retail investors pile into China tech listings, while Taipei has climbed 0.40%.

Singapore and Kuala Lumpur have risen 0.15%, with Jakarta 0.25% higher. Australian markets are following US futures higher, the All Ordinaries is increasing 0.45%, while the ASX 200 has climbed 0.30%. This week’s best performer has been India’s Sensex, which is up 3.35% for the week. Both the Indian rupee and Sensex have benefited from buy-the-dip fast money flows, highlighting the wall of money globally looking for a home. With investors looking past the Covid-19 situation, rightly or wrongly, a dovish FOMC should see that trend continuing this afternoon.

Although Asia is gently bullish as US index futures power higher, I expect the cautious tone to continue ahead of US GDP and China’s Manufacturing and Non-Manufacturing PMI’s tomorrow. Three-day holidays in China and Japan next week are likely to dull activity after the China PMI release. With a tier-2 data calendar in Europe today, I expect markets to remain in US GDP wait-and-see mode also.

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