Asia ignores overnight US equity rally

Asian markets in cautious mode

A wave of caution is sweeping the North Asia heavyweights today, and as usual, it seems to have spurred a rotation into ASEAN markets further south. That has seen Japan, South Korea and China ignoring yet another rally on Wall Street overnight. With markets moving into lower-for-longer mode, the rate-sensitive Nasdaq and S&P 500 outperformed, while the Dow Jones suffered. The S&P 500 finished 0.42% higher, with the Nasdaq jumping 0.81%, while the Dow Jones lagged, rising just 0.09%. Futures on all three are steady in Asia.

In Japan, nerves around the makeup of the fiscal stimulus package have spurred profit-taking. The Nikkei 225 has fallen 0.75%, with South Korea’s Kospi down 0.55%. In China, the Shanghai Composite has fallen on wealth management concerns, edging 0.25% lower. The CSI 300, by contrast, has risen by 0.20%. China property nerves are front and centre in Hong Kong, with the Hang Seng retreating by 0.95%. Tech-centric Taipei has increased by 0.25%.

Singapore has climbed by 0.60% in regional markets on strong bank earnings, with Kuala Lumpur edging 0.20% lower as oil prices remain pressured. Bangkok and Jakarta are flat, while Manila has leapt 1.65% higher after benign inflation numbers and a dollop of IPO-mania. Australian markets are also in the green, helped along by a dovish RBA this week and another overnight rally on Wall Street. The ASX 200 and All Ordinaries are 0.50% higher.

Europe’s data calendar lacks tier-1 releases today and will likely open higher on the back of a strong Wall Street finish. Three Bank of England speakers today will bring some volatility to UK equities after yesterday’s surprise policy decision. Overall, I expect activity to be muted this afternoon in Asia and Europe as the market awaits this evening US jobs print.

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