A mixed day for Asian equities

China stocks dip on geo-politics

Mixed is an apt description for both the overnight US session and today’s Asian session for the stock markets. Overnight, the Nasdaq rose for the 9th straight day, climbing 0.45%, powered by Apple and Facebook. The S&P 500 edged 0.19% lower, while the Dow Jones fell 0.50%. The overriding impression being one of a gentle move to safety from global recovery positioning, as US stimulus talks stalled and Covid-19 lockdowns and cases weighed on US sentiment.

All three major US index futures have edged lower today in Asia, dragging the Nikkei 225 0.25% lower. Japan, which does not shy away from the use of supplementary budgets, will release supplementary budget number three today. At over USD700 billion, the headline number is impressive, although the previous USD2.2 trillion of spending has only managed to keep the lights on in Japan through Covid-19. The budget is unlikely to be market-moving as the spending will be geared towards longer-term growth and diversification of Japan’s economy, not an instant dramatic move today.

In South Korea, the Kospi is 1.10% lower. Geo-politics continues weighing on China, with the Shanghai Composite easing 0.35% and the CSI 300 edging 0.10% lower. Hong Kong has fallen 0.45% after the Government tightened Covid-19 restrictions this morning.

Singapore is unchanged, with negativities on international markets balanced by advances among the digital bank winners and a warm WEF afterglow on the beleaguered leisure sector. Kuala Lumpur and Jakarta are 0.30% higher with Taiwan falling by 0.10%. Australian shares continue ignoring both US stimulus nerves and further China trade pressure. The ASX 200 has climbed 0.30%, and the All Ordinaries has risen 0.15%.

I expect the equity markets to continue circling in a holding pattern after recent rallies. Uncertainty in the US means that temporarily, the downside is the weaker one. But on days like this, it is essential not to look for conspiracies under every rock, with patience being a virtue.

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