Asian equities drift

Asian stock markets in calm waters

Asian equities are drifting today, content to follow Wall Street’s positive session. The overnight session was notable for gains in the Nasdaq, which rose 2.01% as investors returned to the tried and tested big-tech trade. The S&P 500 rose 0.77%, while the Dow Jones, the principal recipient of the vaccine rotation, limped to an almost unchanged close.

Japan’s Nikkei 225 is unchanged, with the Kospi down 0.45%, perhaps reflecting nerves in China’s technology markets. Mainland markets are weighed down by concerns over new government big-tech regulation, offsetting the record sales on Singles Day yesterday. The Shanghai Composite is 0.21% lower, with the CSI 300 down 0.05%.

Hong Kong is down 0.30%, while Taipei has climbed 0.50%. Singapore has retreated 0.30% after an impressive rally this week, while Kuala Lumpur remains in positive territory, up 0.60%. Meanwhile, in Australia, both the All Ordinaries and ASX 200 have fallen 0.60% as investors lock in profits from this week’s rally.

In South Korea, export and import prices remain mired deep in negative territory this morning, although I suspect that is mostly driven by the considerable appreciation of the won. Japan’s Machinery Orders for September dropped sharply, coming in at -11.5% YoY. Still, I expect that to have improved in October. Frankly, any data from September of Q3 anywhere in the world is old news in 2020. On the inflation front, it was more of the same, and not good news at that. The Producer Price Index in October also remained negative, driven by falling energy and chemical prices. Japan remains as far away from inflation as ever, something you could probably have said for the last 30 years.

With the news front quiet today after an inconclusive US session, we expect regional equity markets to continue drifting, awaiting further leads from North America this evening.

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