Asian equity markets directionless

Asian equity markets are book profits ahead of the weekend

A directionless session from Wall Street has set up much the same picture in Asia today. Most major indices are drifting each side of unchanged lethargically. The story was much the same in New York, with the S&P 500 falling 0.21%, the Nasdaq rising 0.27%, and the Dow Jones easing 0.29%.

In Asia, profit-taking ahead of the weekend has ended the Kospi’s 9-day rally, the index falling 1.50% today. Elsewhere though, the picture is much calmer. The Nikkei 225 is unchanged, with the Shanghai Composite, CSI 300 and the Hang Seng down 0.10%.

Across the region, Kuala Lumpur has fallen 0.70% ahead of Malaysia GDP at midday, with the Straits Times just 0.10% lower. More dovish noise from RBA Governor Lowe has seen Australian markets rally modestly. The ASX 200 climbing 0.70%, and the All Ordinaries rising 0.40%.

I do note that despite all the noise surrounding near record highs etc. on Wall Street, all three major indices are tracing out multi-day tops. They may be butting up against new highs, but none can break through them, notably on the NASDAQ and S&P 500. Adverse developments on the US stimulus front, or weak US data this evening could be enough to start a downward correction.

As I stated on Monday, my call for a top in several markets could have made me a hero or a zero by today. With markets in drifting mode today, I am at this stage neither. That does not mean I am out of the game, though.

The week wraps up with the US releasing Retail Sales and Industrial Production this evening. The markets will be showing particular attention to the month-on-month data, giving granularity as to whether the US recovery remains modestly on track, or whether Covid-19 is turning the hopes of the market from a V-shaped recovery to a very fat U. The US releases are projected to head upwards – Retail Sales are expected to gain 1.90% MoM, while Industrial Production MoM is projected to increase by 3.0%.

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