Equity markets start on a mixed note

Wall Street higher but Asian markets mixed

Equity markets are off to a mixed start in Asia, after a robust Wall Street session overnight led by big tech. Overnight, the Wall Street session was notable for investors piling back into the 2020 darlings of the S&P and Nasdaq after ignoring the higher US CPI print. With the Dow Jones lagging, ASEAN’s cyclical markets are also underperforming today, while North Asian markets are mostly higher.

Overnight, the S&P 500 rose by 0.33%, with the Nasdaq leaping 1.05% higher, as the Dow Jones edged 0.20% lower. US index futures have all edged lower today in Asia, mollifying the bullish euphoria seen in other time zones.

In Asia, the Nikkei 225 has fallen 0.40% after disappointing Machinery Tools Orders data. The Kospi has climbed 0.10%, with mainland China’s Shanghai Composite rising 0.50%, with the CSI 300 jumping 0.80% higher. Hong Kong has leapt by 1.15%, while Taiwan has eased 0.20% lower.

Singapore has fallen by 0.15% and Kuala Lumpur by 0.10%, while Jakarta has risen by 0.80%, with Manila unchanged. Australia, meanwhile, sees the ASX 200 0.40% higher and the All Ordinaries increasing by 0.55%.

Asia is once again proving more cautious except for Hong Kong, home to many of China’s tech heavyweights. Asia appears to be taking inflation fears globally, and the ever-present threat of more China tightening more seriously than the wild exuberance of Wall Street at the moment. Covid-19 disruptions to vaccination programmes and rising cases are much closer to home for Asia as well.

With markets ignoring higher inflation in the US, which is set to rise more in the months ahead, the market’s next inflection point is likely to be China’s Friday data dump. China releases Q1 GDP, Industrial Production and Retail Sales, but it would probably take a significant deviation to upset the applecart with the sentiment trumping data. In the meantime, the go-to strategy seems to be to ignore everything and buy everything.

Asia may underperform America and Europe this week, but that may be no bad thing in the long run.

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