Asian stock markets in calm waters

US equity futures set Asia’s direction again

Despite a weak session on Wall Street overnight, it is movements in the US equity index futures that are setting the direction for Asian stock markets today, for the second day in a row. S&P 500, NASDAQ and Dow Jones futures have crept higher by around 0.15% this morning, which has been enough to support early Asian trading. Overnight the S&P 500 fell 0.84%, the NASDAQ retreated 1.24%, and the Dow Jones fell 0.46% with Apple and Facebook notable losers.

In Asia, the Nikkei 225 and Kospi are flat, with mainland China yet to open. The Hang Seng is up 0.30%, with Singapore and Kuala Lumpur almost unchanged. The story is much the same in Sydney, with the ASX 200 and All Ordinaries virtually unchanged as well.

The fact that Asia is content to hitchhike on the aftermarket US futures suggests a lack of conviction regionally and a directionless session ahead. With most of the fallout overnight happening in the tech space, tech-light markets such as Australia and Singapore and regional South-East Asia are likely to outperform today.

The US Initial and Continuing Jobless Claims data was inconclusive overnight. The numbers remained stubbornly high, pointing to the economic recovery slowing down. Still, the unemployment numbers did not deviate too far from the previous weeks, giving no strong signal one way or the other. A fiscal stimulus bill is desperately needed in the US to boost the economy, and a bi-partisan group working on the stimulus bill appears to be making progress and has the support of President Trump. However, there has been no response from the Democrat and Republican congressional leaders though, meaning that this is likely to be a story for late next week, or the week after. The US economy and voters will simply have to wait until lawmakers can get their act together.

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