Asian markets in choppy waters

Asian equities are impressively resilient

US futures were crushed at the Asian open this morning, unwinding all of Friday’s impressive gains. Since then, US index futures have pared some of those initial losses, while several key Asian markets are actually trading in positive territory.

Futures on the S&P 500 are 1.20% lower, while the Nasdaq has tumbled by 1.85%. The Dow Jones has suffered the most, its components having the greatest exposure to skyrocketing energy and commodity prices. Dow futures had retreated 2.05% lower in Asia.

Asian markets are telling a rather different story, based I believe, on SWIFT restrictions not blocking financial flows for energy and commodity exports from Russia, and hopes that the Ukraine-Russia meeting today yields some progress on ending the war. Additionally, China’s PBOC has injected a massive CNY 300 bio of liquidity into local markets today via the 7-day repo, to steady nerves.

That has all left Asian markets trading in a very choppy manner each side of unchanged. The Nikkei 225 is 0.30% higher, with South Korea’s Kospi rising 0.40%. In mainland China, the Shanghai Composite has fallen 0.40% after rising earlier, while the CSI 300 has also fallen by 0.75%, after rising earlier. Hong Kong is down 0.80%.

Singapore is down 0.70%, with Kuala Lumpur jumping 1.10%, likely on the commodity and energy rally. Markets in Taiwan and Indonesia are closed today. Like Kuala Lumpur, Australian markets are also higher. The ASX 200 and All Ordinaries have climbed by 0.50%.

Although Asian markets are chasing their tails somewhat today, with very choppy price action seen, it is notable that we are not seeing a stock meltdown after the weekend’s developments. Europe is unlikely to fare as well given that the actions by the EU and Germany suggest they are prepared to accept more economic pain to bring Russia to heel. European stocks are likely to open sharply lower and reverse Friday’s gains unless we get a positive surprise from the Ukraine-Russia meeting today.

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