Inflationary fears continued to ease overnight, as data from the US and Asia pointed downwards. In the US, the Philadelphia Fed Manufacturing Index retreated from near fifty-year highs to 31.5, much lower than expected. In Asia this morning, the data has been equally benign. South Korean PPI, MoM for April, fell to 0.60%, Australia’s Markit Composite Flash PMI for May fell to 58.10, led by services, while Preliminary Retail Sales MoM for April eased to 1.10%. Japan’s Inflation Rate MoM for April fell by -0.40%, which was a sharper drop than expected.
Wall Street rallies but Asia cautious
Although Wall Street rallied strongly overnight, with the intra-day momentum tail-chasers continuing to rule the roost, Asia is decidedly more subdued as caution rather than exuberance rules. Having decided that inflation wasn’t a problem yesterday, the S&P 500 rose 1.06%, the Nasdaq leapt by 1.77%, and the Down Jones edged 0.53% higher. Futures on all three have edged up 0.10% in Asian trading.
In Asia, ranges have been small. The picture is more mixed, with local positioning flows driving small ranges with even the retail fast-money hotspots of Japan, South Korea, Australia and Hong Kong having a rest. The Nikkei 225 is 0.56% higher, while the Kospi has edged 0.16% lower. Mainland China’s Shanghai Composite has moved o.45% lower, while the CSI 300 has fallen 0.85%. Hong Kong has drifted 0.38% lower.
Singapore is up just 0.10%, while Taipei has climbed 1.0% as value hunters continue to unwind last week’s sell-off and look for semi-conductor bargains. Malaysia is the region’s underperformer, with the KLCI falling 1.25% today. Record Covid-19 cases and the fall in oil prices lie behind the fall, while the massive jump in CPI to 4.70% this morning has sparked inflation fears in one corner of the world. Meanwhile, Australian markets are quiet, the ASX 200 and All Ordinaries down just 0.10%.
European markets are set to open modestly higher as a sense of calm descends on equity markets. Low prints on European and US data today will alleviate inflation nerves even more and likely spark a rally in both centres into the end of the week.
