A mixed start for Asian stock markets

Asian markets under pressure over Omicron jitters

US futures markets and Asian stock markets have diverged sharply today, with US index futures rallying after the bonfire of Friday, while Asian markets have moved sharply lower once again early in the session. Part of Asia’s negatively could be a partial catch-up to the scale of the US and European rout, but also their slower pandemic recovery, the scars of delta, and a much higher beta to world trade and the global recovery.

Meanwhile, US index futures raced higher out of the gate this morning and have continued higher, likely grasping at the straw of reports that Omicron’s symptoms are milder. S&P 500 futures are 1.10% higher, with Nasdaq futures jumping 1.40%, while Dow Jones futures have risen by 0.75%.

The halo effect of the US futures is starting to reverse the early losses suffered in Asian markets. The Nikkei 225 have reversed its entire early falls to be unchanged, with South Korea’s Kospi down only 0.40%. Taipei has also recovered, down only 0.30% now. However, Singapore remains 0.90% lower, with Kuala Lumpur 0.25% and Jakarta 0.68% lower. Tourism-centric Bangkok will likely endure a tough start to the day. Australian markets have staged a sharp about-face this morning after a very negative start, both the ASX 200 and All Ordinaries rallying back to be down just 0.10% for the session.

China markets are mixed with casino stocks in Hong Kong sharply lower as China’s clampdowns extend to that sector. Technology stocks have rallied strongly though leaving the Hang Seng down just 0.20%. In mainland China, the Shanghai Composite is down 0.30% with the CSI 300 easing by 0.25%.

Given the price action seen in Asia today, led by the US futures rally, European stocks are poised to jump higher this afternoon if the US futures rally is sustained. Having been stretchered off with serious injuries on Friday, as Europe faced a double whammy of omicron and its 4^th virus wave, European markets, theoretically, have the most to gain if the price action in oil this morning, for example, is anything to go by.

I would add a large note of caution however for equities in general. Despite the irresistible pull of buying-the-dip on tenuous early information on Omicron, we have just one negative Omicron headline away from going back to where we started. Expect plenty of headline-driven whipsaw price action this week.

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