Asian equity markets higher

Asian markets ignore China worries, Wall Street retreat

Asian equity markets are higher today despite China geopolitical worries and the forced liquidations seen on Wall Street on Friday. The Chinese government has been demonstrating increasing militancy and belligerency in its reprisals against foreign companies that have criticised Xinjiang cotton and the decision to start collecting punitive duties on imported Australian wine.

Asian markets should also receive an intra-day boost from the news that the Ever Given container ship has been refloated in the Suez Canal.

Although US index futures have retreated in Asian trading, the underlying indexes recorded a very positive session on Friday in recovery hopes and boosted by the new Biden infrastructure package’s impending details. The S&P 500 rallied by 1.66%, the Nasdaq climbed 1.24%, and the Dow Jones rallied by 1.39%.

Asia has ignored the US futures today and produced a strong performance. The Nikkei 225 has climbed by 0.95%, although the Kospi is up just 0.20%. The Ever Given news should boost the Kospi as the day goes forward. In China, the Shanghai Composite and CSI 300 have climbed 0.80%, with Hong Kong rising just 0.20% as China tech fears persist, notably the threat of US delisting.

Taiwan has leapt 1.20% higher today, with Singapore climbing 0.55%, Kuala Lumpur by 0.55%, and Jakarta by 0.30%. Bangkok is 0.70% higher after announcing plans to reopen to vaccinated tourists, and Vietnam is 0.80% higher post-data.

Australian markets are lagging through a combination of factors. Brisbane has entered a 3-day Covid-19 lockdown and the Government’s JobKeeper programme ended yesterday. The ASX and All Ordinaries have fallen by 0.30% after China announced the official start of Australian wine duties.

Overall, the Suez Canal developments will be a robust short-term tailwind for Asian equities, and they will also boost sentiment in Europe. European and UK markets should open stronger this afternoon even if the vaccine/Covid-19 situation acts as a cap on gains.

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