Asian equities regain their poise

Asian markets mixed as investors digest FOMC

Wall Street was mixed overnight with the Dow Jones, whose components probably have the highest beta to a stronger US dollar, falling commodity prices, and Fed tapering, being the worst performer. It finished the day 0.62% lower, with the S&P 500 almost unchanged. By contrast, the Nasdaq powered higher to gain 0.87%, and it seems Wall Street’s response to a much-changed FOMC tone and dot plot is to reverse out of the global recovery trade for now.

With today being futures and options expiry day on Wall Street, the aftermarkets futures have been quiet, but all three indexes have managed to rise by around 0.10% in Asian trading. That, combined with an unchanged BoJ, has calmed any nerves in Asia, with markets loosely following the tech/cyclical recovery rotation seen on Wall Street overnight.

That sees Nikkei 225 and Kospi are up by 0.20%, while Taipei is unchanged. Mainland China’s Shanghai Composite and CSI 300 have fallen by 0.45% after being unusually steady yesterday, but Hong Kong, heavy with China-tech heavyweights, has climbed by 0.50%.

Unsurprisingly, cyclical ASEAN is mostly lower with the Dow Jones. Singapore has fallen 0.25%, Bangkok by 0.30%, and Jakarta by 0.90%, while Kuala Lumpur bucks the trend, rising 0.15%. Tech and medical names are leading Australian markets higher today, even as miners sag, with the ASX 200 and All Ordinaries both 0.45% higher.

An inconclusive Wall Street session has left Asia to its own devices on a local basis, where the cyclical rotation seen overnight has prevailed to a lesser degree. That rotation probably sets Europe up for a slightly weaker opening with little data in that region to rock the boat today.

It’s a light global data calendar today, with only UK Retail Sales of passing interest. However, Monday’s Australian Retail Sales and China’s one and five-year Loan Prime Rate decisions may raise temperatures slightly. Otherwise, I expect markets today will be driven by headlines with more than a few eyes watching how US equities finish the week.

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