Equity sell-off continues in Asia

Asia equities slide on higher US inflation

On Friday, the higher-than-expected US inflation data dissolved hopes of a less aggressive FOMC, prompting a mass sell-off of equity markets in the US and Europe. The S&P 500 slumped by 2.91%, the Nasdaq tumbled by 3.52%, and the Dow Jones fell by 2.73%. Things aren’t looking any better with US futures in Asia today, as the selling continues, perhaps with one eye on the weekend crypto meltdown. S&P 500 futures are 1.40% lower, Nasdaq futures have fallen by 1.80%, and Dow futures are 1.0% lower.

Obviously, the slump by Wall Street has provoked a negative reaction in Asian markets today, and mass testing in China over the weekend has lockdown nerves elevated once again. Japan’s Nikkei 225 has tumbled by 2.70%, with South Korea’s Kospi doing slightly worse, retreating by 2.75%, while Taiwan is down by 2.25%.

In mainland China, the Shanghai Composite is 0.85% lower, with the CSI 300 down by 0.95%. There is no solace for Hong Kong, the Hang Seng has slumped by 2.90% today. In regional markets, Singapore is 0.65% lower, Kuala Lumpur is down by 1.50%, and Jakarta has retreated by 1.95%. Bangkok has lost 1.25%, and Manila is 0.55% lower. Australian markets are closed, but New Zealand has slumped by 2.30%.

Given the price action seen today in Asia, especially the continuing selloff of US index futures, it is unlikely that European markets will look to buy the dip. More likely is that they will continue to jail without passing go. Even the perpetually bullish FOMO gnomes of Wall Street may struggle to find a reason to buy the dip this afternoon, especially if the US yield curve continues to flatten.

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