Equity markets have a mixed start

Asian markets calm, Australia shows gains

Equity markets across the Asian Pacific have had a mixed start today, with activity thinned by holidays in Japan and Singapore. That reflected the finish on Wall Street on Friday, where the S&P 500 was flat, the Nasdaq fell 0.87%, and the Dow Jones rose just 0.20%.

Australia is outperforming today, led by bank and consumer stocks, possibly driven by the extension of full job keeper payments by the government as the Covid-19 situation deteriorates in Victoria. The ASX 200 and All Ordinaries have shown strong gains, with each climbing 1.20% higher.

South Korea’s Kospi is also 1.0% higher today, but mainland China’s Shanghai Composite is up only 0.30%, while the CSI 300 has fallen 0.50%, perhaps reflecting its more tech-heavy makeup. The US moves on Friday are clearly weighing on sentiment as the week starts. Hong Kong is also 0.30%, as Tencent shares remain under pressure.

Across several important markets, the charts are showing worrying signs of topping formations that could indicate a downward correction is near. The Nasdaq has traced a double top around 11,300, while the S&P is now approaching formidable resistance at 3,400. The Dow Jones has yet to recapture its June highs at 27,640, although having corrected in July, it’s perhaps best placed for more gain of the three major indices.

Japan’s Nikkei 225 has faded at 23,000 ahead of multi-month resistance around 24,000. Australia’s ASX 200 has attempted and failed each time to move through 6,200, where it now also faces its 200-day moving average. Both Singapore and Hong Kong made post-March highs in early July and have been fading ever since.

The picture is one of fading momentum in the short-term, and equity markets could finally be poised to a unified downward correction for the first time since the mid-March capitulation.

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