Asian equities cautiously mixed

Inflationary fears continued to ease overnight, as data from the US and Asia pointed downwards. In the US, the Philadelphia Fed Manufacturing Index retreated from near fifty-year highs to 31.5, much lower than expected. In Asia this morning, the data has been equally benign. South Korean PPI, MoM for April, fell to 0.60%, Australia’s Markit Composite Flash PMI for May fell to 58.10, led by services, while Preliminary Retail Sales MoM for April eased to 1.10%. Japan’s Inflation Rate MoM for April fell by -0.40%, which was a sharper drop than expected.

Wall Street rallies but Asia cautious

Although Wall Street rallied strongly overnight, with the intra-day momentum tail-chasers continuing to rule the roost, Asia is decidedly more subdued as caution rather than exuberance rules. Having decided that inflation wasn’t a problem yesterday, the S&P 500 rose 1.06%, the Nasdaq leapt by 1.77%, and the Down Jones edged 0.53% higher. Futures on all three have edged up 0.10% in Asian trading.

In Asia, ranges have been small. The picture is more mixed, with local positioning flows driving small ranges with even the retail fast-money hotspots of Japan, South Korea, Australia and Hong Kong having a rest. The Nikkei 225 is 0.56% higher, while the Kospi has edged 0.16% lower. Mainland China’s Shanghai Composite has moved o.45% lower, while the CSI 300 has fallen 0.85%. Hong Kong has drifted 0.38% lower.

Singapore is up just 0.10%, while Taipei has climbed 1.0% as value hunters continue to unwind last week’s sell-off and look for semi-conductor bargains. Malaysia is the region’s underperformer, with the KLCI falling 1.25% today. Record Covid-19 cases and the fall in oil prices lie behind the fall, while the massive jump in CPI to 4.70% this morning has sparked inflation fears in one corner of the world. Meanwhile, Australian markets are quiet, the ASX 200 and All Ordinaries down just 0.10%.

European markets are set to open modestly higher as a sense of calm descends on equity markets. Low prints on European and US data today will alleviate inflation nerves even more and likely spark a rally in both centres into the end of the week.

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at info@marketpulse.com. Visit https://www.marketpulse.com/ to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.