Equities make a U-turn, head south

New York slump sends Asian equities lower

New York equity markets did a massive volte-face overnight and decided that Jerome Powell had been hawkish after all and that higher rates and recession risks were a higher possibility. The Wednesday relief rally vanished into thin air as US stock markets saw every sector in every index get thrashed. The S&P 500 tumbled by 3.55%, the Nasdaq was battered 4.99% lower, while the Dow Jones retreated by 3.12%. In Asia, US futures on all three major indexes are still catching their breath, easing by around 0.10%.

Japan is the only Asian market bucking the trend today, returning from the Golden Week holidays and pricing in a week’s worth of stock market volatility. That has allowed the Nikkei 225 to record an anaemic 0.63% gain today, helped along by a slumping yen. South Korea’s Kospi returns from a one-day break, but that is no solace as it falls by 1.22%.

The reaffirmation of China’s commitment to its covid-zero policy has helped an already sombre mood in China with the PBOC setting a stronger yuan fixing, withdrawing pre-holiday liquidity, and with US delisting worries on the agenda once again. The Shanghai Composite has fallen by 2.30%, the CSI 300 has lost 2.60%, with Hong Kong’s Hang Seng tumbling by 3.65%.

In regional markets, Singapore is 1.30% lower, early trading in India sees the Sensex down 1.50%, while Taipei has fallen by 1.60%. Kuala Lumpur is 0.50% lower, Bangkok is down 1.15%, and Manila has fallen by 0.50%. Australian markets have fallen heavily after the Wall Street slump overnight and have been blindsided by a hawkish RBA SoMP release today. The ASX 200 has retreated by 2.35%, and the All Ordinaries have slumped by 2.45%.

European markets gave back all their early gains overnight, moving into the red with Wall Street in afternoon trading. With the weekend arriving, with its ensuing Eastern Europe event risk, there will be little reason for European investors to walk in looking to buy, especially after Asia’s performance today.

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