Another day, another record close for US equity markets, and thus it was once again overnight despite US bond yields firming slightly. A better than expected Initial Jobless Claims print seems to have been the catalyst/excuse Wall Street needed to send the S&P and Nasdaq to all-time high closes. The S&P 500 rose by 0.60%, the Nasdaq climbed by 0.78%, and the Dow Jones rallied by 0.71%. Futures on all three are in a pre-payroll stupor in Asia, hovering each side of unchanged.
It is much the same in Asia markets, with the Nikkei 225 creeping 0.35% higher while the Kospi has edged 0.15% lower, and Taipei has fallen by 0.30%. Bangkok has had another record day of Covid-19 cases, but the SET has edged 0.15% on the ensuing Baht weakness. In Indonesia, local e-com unicorn Bukalapak IPO’ed today and promptly rose by 25%. That, however, could not lift the broader market, Jakarta climbing just 0.15%. Singapore has increased by 0.20%, while Kuala Lumpur has fallen by 0.15% as both ease into the end of the week. In Australia, the ASX 200 and All Ordinaries are unchanged. The Wallabies impending pummelling by the New Zealand All Blacks in tomorrow’s rugby test, limiting bullish sentiment.
China markets are generally lower as S&P downgraded Evergrande to CCC and warned about their debt trajectory. S&P, Moody’s and Fitch have now all downgraded Evergrande bonds, and that has sent shivers once again through China’s foreign currency-denominated corporate bond market. Combined with the Covid-19 outbreak and Government regulatory fears, China equity markets are heading for a negative finish to the week. The Shanghai Composite is 0.50% lower, with the CSI 300 falling 0.80%, while Hong Kong, somewhat surprisingly for the second day in a row, is holding its own unchanged for the day. Perhaps “bargain hunters” in China tech heavyweights are limiting the fallout there. Let’s see how that works out for them next week.
Europe is likely to follow suit and content itself to trade modestly in the green while awaiting the US employment data. As I said earlier, you can construct a bullish argument for US equities on both a weak or excellent Non-Farm’s number. It would be a brave man who said US equities wouldn’t finish higher tonight, especially if US yields move lower again.
