China caution weighs on Asian equities

China caution weighs on Asian equities

Wall Street enjoyed an outsized session of gains overnight as hot money flocked back into the global recovery trade on diminishing omicron fears. The S&P 500 rose 2.07% with the Nasdaq leaping 3.03% higher, while the Dow Jones added 1.42%. Futures on all three indexes have continued to rally in Asia, climbing by around 0.35%.

Asian markets are having an uneven day, with gains being lesser in scope or non-existent. The chief driver of caution is the deepening woes surrounding the China property sector and its potential impact on 2022 growth. That said, hopes of more stimulus measures from China and falling Covid-19 cases have seen mainland equities post solid gains.

The Nikkei 225 has jumped 1.50% higher today, with the Kospi adding 0.90%. In mainland China, the Shanghai Composite is also 0.90% higher and the CSI 300, more emerging and technology company facing, has added only 0.10%. The same theme is playing out in Hong Kong, home to many of the China tech and property developer heavyweights. The Hang Seng has eased lower by 0.10%. With the negative headlines streaming in still from those sectors, the Hang Seng will remain challenged even as mainland equities rise on stimulus hopes.

Singapore has fallen by 0.25% with Kuala Lumpur down by 0.10% and Jakarta rising just 0.25% today on China concerns. Bangkok has risen by 0.50% as easing omicron concerns boost sentiment in the tourism sector. Manila is 0.25% higher, while Taipei has climbed by 0.45%. Australian markets are all-in on the Wall Street rally, much like Tokyo. The ASX 200 has rallied by 1.45%, with the All Ordinaries leaping higher by 1.65%.

With the Putin/Biden meeting passing without incident, and with European equities ignoring the China property sector concerns, Eurozone equities should continue rallying this afternoon as omicron fears fade. The US Jolts data this evening is unlikely to derail the pent-up bullish momentum on Wall Street, which may have to wait until Friday’s US CPI data.

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