Asian equities don’t buy the US hype

Asian markets cautious despite Wall Street frenzy

US markets were on fire overnight as a slowdown in omicron headlines irresistibly led the fast-money herd into a buy-the-dip frenzy. With pre-holiday season liquidity heightening ranges, US markets soared with the S&P 500 jumping by 1.78%. That was overshadowed by the Nasdaq, which soared 2.40% higher, as the Dow Jones gained an impressive 1.59%. The first sign that this rally is built on eggshells is coming from US futures today though. The S&P 500 and Dow Jones futures have eased by 0.10%, while Nasdaq futures have already given back 0.35%.

With no follow-through on US index futures, Asian markets have rightly adopted a wait-and-see cautious approach today, perhaps tired of the relentless whip-saw price action emanating from New York. Asian markets are mostly higher, but only very moderately so. Even the Nasdaq directional slaves of Tokyo are taking a break today, the Nikkei 225 rising just 0.10%. The South Korean Kospi climbing just 0.15%.

In mainland China, activity is similarly quiet, the Shanghai Composite is unchanged, while the CSI 300 is just 0.10% higher. Hong Kong has put on a better show, rising by 0.60% thus far.

Singapore has just announced a dialling back of its vaccinated travel lane policies due to omicron, and I have a feeling we will see more in the days ahead. That is likely to weigh on sentiment with the STI now up just 0.10%. By contrast, Kuala Lumpur has risen by 0.40%, thanks to oil’s rally overnight, while Taipei is 0.20% higher. Jakarta has gained 0.25% with Bangkok rising 0.45% and Manila unchanged. Australian markets are in Christmas mode, the All Ordinaries edging 0.20% higher, with the ASX 200 up just 0.10%.

The price action in Asia suggests that European and UK markets are unlikely to follow New York’s lead with the UK Prime Minister apparently due to announce a decision on a post-Christmas circuit breaker decision in the next 48 hours. Surging energy prices in Europe, as well as the evolution of omicron across the Eurozone, will weigh limit gains on the continent.

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