Souring risk sentiment sends Asian equities lower
The fast money reversed course overnight as omicron and Evergrande default headlines sent equities lower. The worst hit were the growth trades with the S&P 500 falling 0.72%, the Nasdaq tumbling 1.71% lower, whilst the value-heavy Dow Jones said, “hold my beer,” and added 0.02%. In Asia, the futures have reversed course, the Dow Jones adding 0.10%, while the S&P 500 and Nasdaq futures have risen by 0.20%.
To those negative headwinds in Asia, can be added China weakening its currency today, a hint perhaps from China that growth concerns are rising. The Nikkei 225 has fallen 0.53% while the Kospi is 0.65% lower. Mainland China markets have ignored a weaker yuan today, focusing on the Evergrande/Kaisa defaults. The Shanghai Composite and CSI 300 are 0.45% lower, with Hong Kong falling by 0.40%.
Singapore is 0.25% lower, Kuala Lumpur 0.05% down and Jakarta and Taipei retreat by 0.45%. Bangkok has eased by 0.25% and Manila has retreated 0.65%. Australian markets are also lower, compounded by headlines suggesting there will be Christmas beer shortages in the lucky country. Despite a thirst for good news, the ASX 200 and All ordinaries are 0.50% lower today.
European equities will likely open lower as well as the street takes risk of the table into the US inflation data and the weekend, which will now contain plenty of headline risk, be it omicron, China or the Ukraine, etc. The price action shows that equity markets continue to tie themselves up in knots on headline-driven price action. This is not a market comfortable, or pricing in, 7.0% US inflation or a hawkish FOMC next week. The whipsaw price action will continue, and with rising risk pressure points appearing everywhere, the odds that the FOMC next week is the straw on the camel’s back are rising.
