US, Asian markets mixed

Asian equity markets quiet

Despite US equity index futures rising in Asia this morning, regional markets seem to be taking their cues from the overnight US session and reducing positioning into the US holiday. Overnight Wall Street finished mixed, with the S&P 500 easing 0.16%, the Nasdaq climbing 0.47% after Salesforce decided to cut itself some Slack, and the Dow Jones losing 0.58%.

The FOMC minutes indicated that members were not looking to increase QE in December but instead, redeploy their bond-buying in different ways. I would expect this to mean a shifting to a yield curve control (YCC) stance and getting more involved in the long end of the curve, especially since the curve has steepened in the past two weeks. Overall, the FOMC minutes are likely not as dovish as many investors had hoped. Today’s US holiday means that markets are vulnerable to headline risks on a quiet day. Thus, Asia is likely to follow America’s lead and book profits and take some risk off the table.

All three US index futures have risen in Asia, and that appears to have lifted the Nikkei 225 to a 0.51% gain today, propelled by Japan’s retail FOMO-herd. Elsewhere though the picture is more circumspect. The Kospi is just 0.20% higher, while Taipei has jumped 0.75% higher.

Mainland China’s Shanghai Composite and CSI 300 have fallen 0.45%, with Hong Kong eking out a 0.15% gain. Jakarta has risen 0.75% after the central bank “suggested” that banks lend more, which Kuala Lumpur is flat, and Singapore has fallen 0.65%. In Australia, the ASX 200 is 0.35% lower, and the All Ordinaries has declined by 0.10%.

The pro-cyclical markets appear to be underperforming today, having enjoyed a number of sessions in the vaccine sun. Japan aside, the more tech-heavy markets of Taiwan and South Korea are outperforming, in line with the Nasdaq overnight. The overriding impression I have is that investors are choosing to hedge profits by rotating back into work-from-home from cyclical, instead of taking risk completely of the board; hence the mixed price action seen in the region today.

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