Asian stock markets are a mixed bag today. Northern Asian markets have edged lower on US/China relations. South East Asian markets appear to be consolidating, with trade-centric Australian indices flat. Australian PMI’s showed a continuing improvement, especially services, as much of the country emerges from pandemic lockdowns. South Korean GDP disappointed though, falling an above expected 3.30% QoQ. Forecasts had been for a 2.50% fall, and so, in the scale of surprises, the GDP highlights the economic challenges that Covid-19 has presented. It does not change the overall view. Both the South Korean government and the Bank of Korea are likely to stand pat from here, allowing the extra budgets, rate easings and events elsewhere to work their way through the system.
US stock markets had a modestly positive day after dropping initially post the Houston consulate announcement by the US government. However, Tesla posted an above-expected profit for Q2, prompting an immediate 10% rally in their share price and lifting Wall Street from its gloom. The S&P 500 finished 0.58% higher, the Nasdaq rose 0.24%, and the Dow Jones rose 0.62%.
In Asia, China’s mainland exchanges have retreated on geopolitical concerns this morning. The Shanghai Composite has fallen 1.80%, and the CSI 300 is down 1.60%. Hong Kong though is unchanged on the day as IPO fever maintains a positive tempo. Disappointing GDP sees the Kospi falling 1.0% this morning.
Across South East Asia, Singapore is unchanged, with Kuala Lumpur up 0.40% and Jakarta up 0.80%. Australia’s ASX 200 and All Ordinaries are almost unchanged, down 0.10%.
Overall, stocks appear to be in consolidation mode today, and we expect more of the same once Europe arrives. Key event risks in the short-term will be US jobless data and the level of Chinese retaliation over its Houston consulate closure.
