Asian equities are in a positive mood

Asian markets take cue from optimistic Wall Street

Overnight US equities continued to rally, although the gains were modest compared to the fast-money FOMO stampede of the day before. Comments from pharmaceutical heavyweights that boosters were the answer kept the omicron-is-mild trade alive. The S&P 500 rose 0.31%, with the Nasdaq rising by 0.64% as the growth rebound continued, while the Dow Jones eked out a minuscule 0.09% gain. In Asia, futures on all three indexes have climbed by around 0.10%.

The risks of whipsaw price movement have not disappeared. As I have said before, volatility will be the winner in December, not directional plays. Having said that, I am not calling for the end of days for the 21-month stock market rally, merely that we can now expect a lot more two-way volatility going forward.

The solid, if an unspectacular day on Wall Street, has bolstered sentiment in Asia, where regional investors are also buying into the China property developer debt-restructuring story. Despite the bad news pouring in from the property developer space this week, is taking their pleas for debt restructuring as meaning the government will facilitate “something.”

Japan is seeing profit-taking after the rally yesterday with the Nikkei 225 unchanged. The Kospi is 0.55% higher. In mainland China, benign inflation, property sector restructuring, and stimulus hopes continue to drive gains. The Shanghai Composite and CSI 300 have rallied 0.90% today and Hong Kong has recovered its poise to rally by 1.10%.

Regionally, Singapore is 0.30% higher, with Kuala Lumpur rising 0.20%, and Taipei by 0.10%. Jakarta is 0.40% higher, with Bangkok adding 0.70%, with Manila unchanged. After some impressive gains this week, Australian markets are taking a breather today, perhaps watching the Ashes cricket. The All Ordinaries and ASX 200 have moved 0.15% higher.

European equities should open higher today after a positive overnight session. I expect gains to be limited though, as Eurozone and UK markets are crimped by the spectre of tighter Covid-19 restrictions, omicron or not.

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