Stock markets are mixed in Asia

Japanese equities dip, China edges higher

Stock markets are a mixed bag in Asia after Wall Street limped to an almost unchanged finish despite the Powell testimony steadying the ship. The S&P 500 finished 0.12% higher, the Nasdaq closed 0.22% lower, and the Dow Jones edged 0.13% higher. With little direction from Wall Street, which seems to be focusing on upcoming earnings now, Asian markets have been left to their own individual devices.

The Nikkei 225 has fallen 0.88% as speculation mounts that the Bank of Japan will downgrade its outlook for the economy at tomorrow’s policy meeting. Despite a slightly hawkish bent to the statement, the Bank of Korea kept rates at a record low of 0.50% this morning, which has lifted the Kospi by 0.45%.

In China, the solid, if unspectacular data dump today see the Shanghai Composite edging 0.20% higher, while the CSI 300 is up just 0.10%. However, Hong Kong has jumped 1.15% as China tech giants talk about opening up their ecosystems to each other, something markets feel will please their ultimate bosses in Beijing. Hong Kong should also benefit from a rotation of China IPOs from the US going forward.

Taipei has risen by 0.45% today, while Singapore has fallen 0.40% after another surge in Covid-19 cases. Kuala Lumpur and Jakarta have, quite surprisingly, climbed by 0.50% in what I assume are technical moves after some previously tricky sessions. I would approach rallies in each with a large grain of salt given the Covid-19 situations both are experiencing. Regional Asia had the most to lose from a change in Fed tone, and the Powell testimony overnight has likely driven the gains. Bangkok is 0.20% higher while Manila has fallen 0.80%.

The impressive Australian employment data has not been enough to keep markets in the green there, as new cases of Covid-19 pop up across Australia, raising fears of ever-expanding lockdowns. The ASX 200 is 0.30% lower, while the All Ordinaries has eased by 0.10%.

European stock markets should ignore Asia as a result of their vaccination premium. With the Fed still unconcerned about inflation, that should be enough to lift European stocks initially. It is unlikely that Wall Street will sustain any significant dips into the end of the week either. As I have said before, respect the momentum.

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