Asian equities do the North/South split

Asian equities a mixed bag

Wall Street enjoyed a positive session overnight, led by big-tech in anticipation of strong Apple and Amazon earnings. The S&P 500 rallied 0.98% higher, with the Nasdaq leaping 1.39% higher, and the Dow Jones booking a 0.68% gain. Disappointing results from both titans after the close slammed the door on the rally with Nasdaq futures tumbling by 0.70%, S&P 500 futures falling 0.35%, while Dow futures have edged just 0.05% lower. The initial reaction is rather less bad than I would have expected, and the perpetual bulls of Wall Street may be looking for a potential rebound in Q4 already.

In Asia, it is the North Asia heavyweights that are taking the heat, and in price action we have seen rather often of late, those sellers appear to be rotating into ASEAN markets defensively rather than exiting altogether. It is no coincidence that markets heavy with Apple suppliers are falling the most. Taipei is down 0.60% and South Korea’s Kospi is 0.70% lower. Japan was sold heavily initially but has since recovered to be only 0.10% lower. Gains should be limited from here as Japan heads into Lower House elections on Sunday.

With the state planner talking down coal prices and Evergrande making its offshore coupon payment just ahead of today’s final deadline, sentiment is more positive in China. That was assisted by another giant CNY 100 billion liquidity injection by the PBOC via the repo market today. The Shanghai Composite is 0.05% higher with the narrower Shanghai 50, heavy with banks, rinsing by 0.35%. The CSI 300 is up 0.20% while Hong Kong can’t quite shake off the tech-funk, falling 0.55%.

In ASEAN, the picture is more solid as investors rotate south. Singapore is 0.70% higher while Jakarta is up 0.75% and Kuala Lumpur is unchanged.  Bangkok has risen by 0.15% but Manila have fallen by 0.90% today.

Australian markets have taken fright at the huge jump of the 3-year CGB yields to 0.75% this morning, and the absence of the RBA whose target is just 0.10%. Markets are pricing in a change of monetary stance from the RBA who are now looking at a rapidly developing credibility issue. That has left the ASX 200 lower by 0.80%, while the All Ordinaries has fallen by 0.60%.

The fallout from the Apple and Amazon results has been relatively muted in the bigger picture. Supply change blockages and shortages also appear to be being accepted as a fact of life by markets. With the ECB out of the way as well, there should be no reason for European stocks not to rally modestly this afternoon. The picture in US markets is rather cloudier, but once again, it would not surprise me if they took the Apple and Amazon results in their stride and rallied, especially if the OPEC+ story gains credence and we see a concrete breakthrough on democrat spending plans.

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