Wall Street parties but Asia mixed

Asian equities mixed following the Wall Street rally

After improving Jobless Claims and a non-event US 30-year auction greenlighted the buy-everything business as usual trade, big-tech was back overnight. Although still in correction territory, the Nasdaq powered 2.52% higher, while the S&P 500 and Dow Jones ended in record territory, rising 1.04% and 0.58%, respectively.

There were concerns ahead of the US 30-year bond auction, but demand was strong enough so that the auction was passed without incident. Although the bid-to-cover ratio wasn’t spectacular, like the 10-year the day before, most of the issue went to direct buyers, not primary dealers, indicating an underlying broader demand. That was the last potential barrier for the week for simmering global recovery demand.

US futures are pausing for breath in Asia, and the region is delivering a mixed performance today, with some regional markets pausing for breath. Outperforming are the Nikkei 225 and Kospi, which have both risen by 1.20%. Taipei has climbed 0.30%, with Bangkok 0.25% higher.

Mainland China and Hong Kong are pausing for breath, though, after state-led buying saw strong rebounds in previous sessions. Threats of fines and further restrictions on Ali Baba are also weighing on sentiment in the tech sector. The Shanghai Composite is 0.40% higher, while the CSI 300 is unchanged, and the Hang Seng is 0.30% lower.

The cyclical outperformers this week in ASEAN is also seeing a mixed performance after technology’s overnight comeback. Singapore is unchanged, while Kuala Lumpur is down 0.55%, while a stronger Indonesian Rupiah has lifted Jakarta by 0.80%. Australian markets are following their masters on Wall Street. The ASX 200 is 0.75% higher, while the All Ordinaries has climbed 0.95%.

The mixed performance in Asia reflects the effects of the cyclical rotation trade prevalent earlier in the week. The state intervention in China front-running the Wall Street rally overnight. With cyclicals gaining only slightly in Asia, Europe is likely to open higher, but not set the world on fire. However, Wall Street should be set for another strong finish to the week as recovery overrules inflation fear for now.

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