Asian equities whipsaw early

Tech stocks drag down China markets

Early Asian trading headed directly to jail, with a North Korean missile launch sinking the Nikkei 225 and Kospi, while tech-sector jitters saw mainland and Hong Kong markets drop over 2.0%. Rumours of quasi-government intervention in China markets and the rumoured refloating of the Suez Canal container ship have abruptly changed the direction of all of the above.

The Nikkei 225 is now 0.75% higher, with the Kospi rising by 0.55%. The Shanghai Composite, CSI 300 and Hang Seng are all unchanged, having been deep in the red earlier. US futures on the Nasdaq, S&P 500 and Dow Jones have risen modestly after the Nasdaq fell 2.0% overnight.  The tech-heavy Nasdaq sagged as strong PMIs from the US and Europe overnight saw the cyclical rotation trade reappear in equities.

In ASEAN, Singapore and Bangkok are 0.20% higher, Kuala Lumpur is 0.20% lower, and Jakarta is down 0.60%. Manila is outperforming, rising 1.50%, as the central bank is expected to keep rates unchanged this afternoon. Cyclical ASEAN markets performance is roughly in line with the unchanged Dow Jones overnight. Australia’s ASX 200 and All Ordinaries are also both unchanged.

Attention seems very much focused on the North Asian markets today for obvious reasons. If the Suez Canal story is proven correct, Asian markets should derive a slight lift, as will European markets later on this afternoon.

Thirdly, Reuters is exclusively reporting that the US SEC is launching an inquiry into the SPAC IPO frenzy. I am not sure of the story’s ramifications as yet, but I felt that reports this week that WeWork was preparing to list via a SPAC at a USD9 billion valuation, must surely represent “peak SPAC.”

Another development that investors are keeping an eye on is President Biden’s next stimulus move. Biden is due to announce a preliminary outline of his follow-on USD3 trillion remake America package next week.

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