Given the meltdowns in markets around the world yesterday, Asia equity markets are showing surprising resilience today. The buy-the-dippers couldn’t resist and the Evergrande Charman’s soothing words appear to have lifted hopes, if not spirits temporarily.
Wall Street finished on a negative note, the S&P 500 sliding by 1.70%, the Nasdaq tumbling by 2.19%, and the Dow Jones retreating 1.79%. In Asia, however, futures on all three have rallied strongly by between 0.35% and 0.40%, which has perhaps also helped stabilise Asia with commodities also rallying.
Asian markets are mixed with Mainland China and South Korea closed today. The exception is Japan, where the Nikkei has played catch-up after being closed yesterday. The Nikkei 225 has fallen by 2.0%. Elsewhere though, the picture is mixed but could have been worse. Hong Kong is down just 0.90%, but Singapore has risen by 0.45%. Kuala Lumpur and Bangkok are flat, and Jakarta is down 0.60%.
Australian markets have completely unwound early losses as commodities, unloved yesterday, have rebounded sharply in Asia. The ASX 200 is down just 0.05%, while the All Ordinaries is now in positive territory, up by 0.15%. Sentiment was further boosted by the RBA minutes which suggested that no rate hikes were likely before 2024.
The dip-buying seen in Asia is likely to also lift European stocks this afternoon, particularly if US index futures maintain their strong gains this morning. I would remain cautious in the present climate however, and markets are probably just one headline away from an abrupt about face which will see investors hitting the sell button again. We can expect more of the same intra-day volatility throughout the rest of the week until Evergrande’s Thursday payment date.
