Asian stock markets retreat

Asian markets dip on stimulus static

Wall Street gave back most of its gains intra-day overnight, leading to a mixed finish as stimulus reality bit, thanks to the Senate Republicans, who are grumbling about Biden’s USD1.9 trillion stimulus plan. The S&P 500 finished 0.36% higher, the Nasdaq finished 0.69% higher, but the Dow Jones ended the day 0.11% lower. Aftermarket futures on all three indexes have retreated by between 0.30% and 0.40% this morning as the stimulus shakeout continues.

True, the news of Republican rumblings came as equity markets had become extended in the shorter horizon, with the buy everything trade in full cry. Yesterday in Hong Kong, Chinese mainland retail buyers continued their tech-buying frenzy, sending Tencent to a near USD1 trillion valuation. There was some gob-smacking price action in the options market as well. Still, with markets in the US and China being powered by gossip on internet chatrooms and overwhelming fundamentals through sheer weight of numbers, it would be dangerous to call markets a bubble or say “peak-retail” just yet.

The negative reaction on Wall Street over the resistance to the stimulus plan has spilt over into Asian markets, which are mostly in the red this morning. The Nikkei 225 has fallen 0.80% with the Kospi down 1.50%. In China, the Shanghai Composite and CSI 300 have lost 0.95%, while the Hang Seng, pumped up by Chinese retail money these past few days, is 1.55% lower.

Singapore has fallen 0.75%, with Jakarta down 0.25%, and Taipei is 0.45% lower. Malaysia is bucking the trend, the KLCI rising by 1.0% with semi-conductor companies leading the charge. Australian markets are closed for a public holiday and the barbecuing of prawns.

The negativity is likely to spill into European markets without any meaningful data from the Eurozone today. At this stage, the price action looks more corrective than structural. An increase in Republican stimulus resistance will further dampen equity market spirits.

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