A mixed Monday for Asian equities

Asia markets cautious in holiday-thinned trade 

Friday’s price action on Wall Street was somewhat jumbled amid month-end rebalancing flows by institutional investors and taper-talk from Fed Governor Kaplan. On Friday, Kaplan said that there are excesses and imbalances in financial markets and the Fed needs to start discussing tapering.

The S&P 500 fell 0.72%, while the Nasdaq fell 0.85%, with the Dow Jones retesting 0.53%. That left the major indices flat to slightly lower for the week, even as they recorded solid monthly gains. If anything, the price action suggests that investors are nervous at these heady levels and hyper-sensitive to any tapering headlines, no matter how who makes them. Equities are not the only asset class to be behaving that way to be fair, as we shall see.

US index futures have risen by between 0.20% and 0.30% in Asia, but that hasn’t lifted sentiment in holiday-thinned markets, nor has the robust PMI data. One exception is Hong Kong is 1.40% lower. The source of its woes appears to be a continuing stream of negative headline regarding the mainland Government and China big-tech companies, many of which are listed in Hong Kong.

Singapore is also suffering as investors take fright at widening community cases in its latest Covid-19 outbreaks. The government signalled over the weekend that it was preparing to reimpose restrictions if the outbreak increases. The STI has fallen 1.40% today as investors fear the impact on the City-state’s fragile domestic recovery.

Elsewhere, Kuala Lumpur and Jakarta are 0.35% lower, Taipei has fallen 1.50% on localised Covid-19 fears as well. At the same time, South Korea’s Kospi, and Australia’s All Ordinaries and ASX 200 are all unchanged for the day.

Looking at the Covid-19 reactions around Asia, it is hard to see India’s Sensex rallying later today. European markets should remain relatively immune, though, with PMI data likely to support modest gains.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Jeffrey Halley

With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley is OANDA’s senior market analyst for Asia Pacific, responsible for providing timely and relevant macro analysis covering a wide range of asset classes. He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays. A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV, Channel News Asia as well as in leading print publications including the New York Times and The Wall Street Journal, among others. He was born in New Zealand and holds an MBA from the Cass Business School.

Jeffrey Halley

Jeffrey Halley

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