US rally powers Asian equities
Asian equities are performing strongly today after US stocks rallied overnight, with the futures moving higher today. The S&P 500 rose 0.52% overnight, with the Nasdaq climbing 0.12% and the Dow Jones rallying 0.62%. The jobless claims report boosted stocks, and cyclical rotation was evident after the Fed signalled a resumption of full bank dividends. In Asia, the futures on all three indexes have powered higher, rising between 0.30% and 0.45%, with the Nasdaq futures outperforming.
That has unleashed the Friday FOMO animal spirits in Northern Asia, with the Nikkei 225 leaping 1.75%, with the Kospi climbing 0.80%. The “national team” intervention yesterday has boosted retail sentiment in China. The Shanghai Composite has risen 1.45%, with the CSI 300 climbing 1.10%. The Hang Seng is now 1.0% higher for the day. Taiwan has also rallied 1.35%.
Further south, Singapore has risen 0.40% while Kuala Lumpur is flat, Jakarta and Bangkok are up 0.20%. Australian markets are also higher, with bullish spirits tempered by a new Covid-19 community case in Queensland and ongoing massive floods. The ASX 200 and All Ordinaries have risen 0.55%.
With Nasdaq futures outperforming this morning, rotation into the more tech-heavy Northern Asia markets has occurred at the cyclical ASEAN ones’ expense. The performance in Asia today should be enough to lift European and UK markets, although the vaccine spat, and Europe’s lockdown will temper gains. US PCE data this evening has the potential to send yields higher if it outperforms, and that could temper the animal spirits into the week’s end.
The Asian data calendar is once again very light, leaving the region to continue its Wall Street follow the leader pattern of the past week. Next week the calendar will be busier, with China Industrial Profits released on Sunday, followed by the official and Caixin PMI’s on Wednesday and Thursday. The pan-Asia Markit PMI data also hits the wires on Thursday. Malaysian Trade and South Korean Manufacturing bookend it at the start of the week, and Thailand Manufacturing and South Korean Exports also on Thursday.
