Receding Fed taper boosts Asian heavyweights
Friday’s US employment data substantially lowered the risks of a Fed taper this year, which is playing out well in Asian equity markets this morning. Wall Street had a non-descript finish on Friday despite the huge downside miss by the US data, with a long weekend appearing foremost in US investors’ minds. The S&P 500 finished almost unchanged at 0.03% higher; the Nasdaq rose by 0.21%, while the Dow Jones retreated by 0.21%. US futures are practically unchanged, with US OTC markets closed today.
In Asia, receding tapering fears and rising expectations of stimulus locally after soft data last week has lifted Japan and China markets, in particular. The Nikkei 225 is still experiencing a post-Suga rush, leaping 1.60% higher as local investors expect a pre-election fiscal tap opening. The Kospi is having a sedate start, though, rising just 0.10%.
Similarly, the soft China data last week has lifted hopes of an earlier RRR cut as well as more central government largesse. That has sent the Shanghai Composite soaring by 1.25%, the CSI 300 by 1.65%, and the Hang Seng by 0.45%. After some torrid sessions recently, led by governmental sectorial clampdowns, it appears that bargain hunters are out in force today in mainland equities.
Singapore has risen by 0.20% this morning, and Taipei by 0.12%. Kuala Lumpur has retreated by 0.55% as oil prices come under pressure once again. Bangkok is just 0.10% lower, despite the government surviving a non-confidence vote over the weekend. Jakarta has fallen 0.35%, with Manila down 0.25%.
Australian markets have retreated today after large-cap heavyweights went ex-dividend and Covid-19 cases continued climbing in New South Wales and Victoria. They have, however, reclaimed part of their early losses suggesting that today’s sell-off is not the start of a broader movement. A suitably dovish RBA tomorrow should restore business as usual. The ASX 200 has fallen by 0.50%, while the All Ordinaries has retreated by 0.65%.
Although Europe’s eyes will be on German data and the ECB this week, the soft payroll data from Friday should lift European equities into the green today, with a Fed tapering having been dealt a severe blow.