Nikkei jumps but Chinese markets drifting
The return of China and Japan from holiday has seen a mixed start to the day, after Wall Street finished inconclusively, with its early tech rally petering out into modest cyclical rotation. The S&P 500 closed just 0.07% higher, while the Nasdaq retreated 0.37% at the expense of the Dow Jones, which rose 0.28%. Futures on all three has edged ever so slightly into the red in Asia after early gains. US markets also appear to be banking on a bumper Non-Farm Payrolls number, leading to recovery trade rotation on a modest scale.
In Asia, the Nikkei 225 has leapt nearly 2.0% higher as investors returned from holiday. With Covid-19 concerns still apparent, the rally is surprising. I can see no other explanation other than retail mania expecting robust US data tomorrow night. The Kospi has also rallied 0.70%, and Taiwan has rallied by 1.10%.
Mainland China’s return has been altogether more muted, with the PBOC withdrawing liquidity and G-7 statement and Australian political temperatures on the rise once again. The Shanghai Composite has edged 0.10% higher, while the CSI 300 has edged 0.10% lower. Hong Kong has given up early gains in sympathy and is now unchanged for the day.
Singapore has risen 0.56% today as its community Covid-19 situation appears to be stabilising, with the new social restrictions taken quickly in their stride. More likely, though, is that dip-buyers have appeared after a few negative sessions, boosted by an 18% rise in profits from UOB. Across ASEAN, Malaysia has fallen 1.10% which Jakarta has risen 0.45%.
By contrast, Australian markets are in retreat. The China lease of the Darwin port saga is escalating as Reuters reports a China state planner says to suspend indefinitely all activities under the China-Australia strategic economic dialogue mechanism. Both equities and the Australian dollar have fallen on this news, with Sino-Australia relations a definite sell on rallies. The All Ordinaries has declined 0.40%, while the ASX 200 is lower by 0.55%.
The lack of uniformity in Asia Pacific’s price action suggests that regional markets are positioning themselves for the US Non-Farm data tomorrow night, leading to certain randomness in the price action. The last-minute jockeying is likely to extend into tomorrow’s session.
