Asian equities stage a surprise rally
Asian equities are higher across the board this morning, despite a sombre finish by Wall Street. Growth fears and delta-variants finally saw Wall Street’s multi-day run higher, come to an end overnight. The S&P 500 fell by 0.70%, the Nasdaq slumped by 0.93%, and the Dow Jones retreated by 0.79% as a wave of risk aversion swept equity markets and other asset classes. Aftermarket futures on all three have risen modestly, with Asia today, climbing by around 0.10%.
Asian markets are mostly rallying today, though, in contrast to Wall Street. As I have stated, the drivers for the rallies across the region are not clear. An on-hold RBNZ, falling virus cases in China, a weak CNY fixing, bargain hunting after a few negative days or weaker Asian currencies, or a FOMO buy the dip could all be combining to drive the rally. Without looking under the bonnet regionally, much of the buying could also be in more defensive stocks, pushing up the headline indexes.
Either way, Asia is enjoying a good day with the Nikkei 225 0.73% higher and the Kospi jumping by 0.95%. China’s Shanghai Composite, CSI 300 and Hang Seng are all 0.70% higher. Singapore has jumped by 0.90%, while Taipei is up 0.20%, and Bangkok and Jakarta are 0.30%. Kuala Lumpur lags the region, the KLCI unchanged on the day as Malaysia’s political chaos weighs on investor sentiment. Australian markets are labouring under virus concerns still with the ASX 200 and All Ordinaries climbing just 0.10% today, while New Zealand receives an RBNZ boost on its way to a 0.55% gain.
The key will be whether today’s rally has legs or not or is merely a FOMO buy-the-dip one-off. We should know more tomorrow. The price action by Asia and the US futures should be enough to alleviate virus nerves temporarily in Europe, which I expect to open modestly higher today as a result.
