Ex-China equities rally sharply in Asia

Asian markets rise after Brainard remarks

Equity markets ex-China, in Asia, are having a positive session, helped by US index futures booking strong gains today after Lael Brainard torpedoed the “peak inflation” rally on Wall Street overnight. Overnight, The S&P 500 finished 0.34% lower, the Nasdaq lost 0.30%, and the Dow Jones fell by 0.26%. Futures in Asia have found their highs in inflation mojo once again, though. S&P 500 and Dow Jones futures have rallied by 0.50%, while Nasdaq futures have jumped by 0.75%.

That has boosted Asian markets with Japan’s Nikkei 225 leaping 1.60% higher, and South Korea’s Kospi adding 1.40%. Taipei has recorded an impressive 1.75% gain, with Singapore rising by 0.65%, Jakarta by 0.35%, and Kuala Lumpur by 0.25%. Bangkok is closed, with Manila gaining 0.25%. Australia has followed US futures higher, helped by higher overnight oil prices. The All Ordinaries has risen by 0.50%, with the ASX 200 gaining 0.35%.

China markets continue to be heavy despite government officials encouraging institutional investors to buy dips yesterday. That lead to a sharp rally by onshore equities yesterday. Today, Covid-zero nerves have returned as cases in Shanghai stay stubbornly high. As I alluded to yesterday, the small print of the easing of Shanghai restrictions contained plenty of poison pills. Flat-lining imports in today’s trade data will not alleviate concerns over domestic consumption. The Shanghai Composite has fallen 0.45%, with the CSI 300 down 0.50%. Hong Kong has limped to a 0.30% gain this morning.

President Putin’s comments about a dead-end in Ukraine negotiations and hints that he is comfortable with a drawn-out “special operation” will not sit well with European markets today. Nor will the overnight rebound in energy prices. Concerns of more hawkish guidance from tomorrow’s ECB policy meeting will also temper sentiment today.

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