Asian equities play wait-and-see

Wall Street raced higher overnight, led by Apple and Amazon ahead of the new iPhone launch and the Amazon Prime shopping day starting. Technology outperformed an action in the options markets suggests the FOMO buy-everything herd is back feasting on technology large-caps. The Nasdaq rose 2.50%, with the S&P 500 rising 1.60% and the Dow Jones 0.90%.

Although China’s CSI 300 rose over 3.0% yesterday in the end on fiscal policy hopes, Asia’s markets today are generally tranquil. Stock markets globally, notably the US, are increasingly comfortable with a Biden presidency and even a Democrat clean sweep. But ex-New York, there is a lack of appetite to follow the US slavishly due to the ever-present out of hours Presidential tweet risk. With Hong Kong now closed officially for the day due to weather, short-term investors in Asia needed no other excuse to remain on the side-lines.

China’s trade surplus disappoints

Investors raised eyebrows at China’s September Balance of Trade. The country’s trade surplus was unexpectedly soft, falling to USD37 billion in US dollar terms, compared to the forecast from USD60 billion. Exports rose by 9.90% YoY in September, but it was import numbers provided a real shocker. Imports rose by 13.20% YoY in September versus market forecasts of just a 0.50% rise. A stronger yuan versus the US dollar is one contributing factor, but most of the increase appears to be due to massive increases in iron ore, copper ore and oil imports.

The Nikkei 225 is up just 0.10%, with China’s CSI 300 and Shanghai Composite down 0.25%. Singapore has risen 0.10%, with Kuala Lumpur down 0.30%. As ever, the ever-exuberant Australian markets are the exception, ignoring China coal concerns. Both major indices are 1.0% higher on a favourable New York session and merger speculation in the resources sector.

We expect equities to mark time ahead of regional event risk this afternoon.

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