Equities in Asia are very mixed

Wall Street takes a tumble

Rotational plays are the order of the day in Asia, with North Asian markets under heavy pressure, while ASEAN and Australasian markets stay afloat on the recovery rotation tailwind. That is a repeat of the flows seen on Wall Street where the S&P 500 fell 0.54%, the Nasdaq tumbled by 2.54%, while the Dow Jones climbed by 0.97%.

China state funds have allegedly intervened on the CSI 300 this morning, buying stocks and reversing their earlier 3.0% losses. The CSI 300 broke below its multi-month uptrend support yesterday, as well as its 100-day moving average (DMA). The failure and daily close below 5260.00 was an ominous technical signal for the index, and it remains well below that level now, at 5093.00. its next technical target being the 4800.00 regions.

The rally in the CSI 300, now 0.20% higher on the day, has lifted the Shanghai Composite to unchanged, and the Nikkei 225 now 0.90% higher. US index futures have also rallied aggressively, with Nasdaq futures 1.25% higher. South Korea’s Kospi was down 3.0% at one stage today but has climbed back to be just -0.90% lower.

Hong Kong is 1.50% higher and seems to have been the recipient of mainland retail investor flows down the Shenzhen and Shanghai pipes this morning. ASEAN markets had started the day in the green and remain so. Singapore is 1.50% higher, with Kuala Lumpur up 0.75% and Jakarta 0.20% higher. Australia’s All Ordinaries is 0.40% higher, while the ASX 200 has climbed 0.50%.

The S&P 500 continues to flirt with its March 2020 uptrend, today at 3838.00. The 100-DMA at 3705.00 becomes the initial target if we get an extended break lower. The Nasdaq has now closed under its 100-DMA at 12,630.00, having fallen comprehensively through its March 2020 two weeks ago. It now targets the 200-DMA at 11,777.00. The rotation darling, the Dow Jones, set record highs overnight, but its March 2020 support line is creeping closer to current levels as well.

Despite the China-driven jump today, markets remain acutely vulnerable to further downside correction, especially those heavy in 2020 pandemic darlings. Cyclical markets less so. Today’s sudden bounce looks like one to sell into.

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