Asian equities are enduring a mostly negative day, despite a modestly positive overnight lead from Wall Street. Overnight, the rally continued Wall Street, with the S&P 500 rising by 0.29%. The Nasdaq climbed 0.35%, while the Dow Jones finished just 0.04% higher following a mixed set of earnings releases in the US, and overall volumes lower than average. US futures are unchanged in Asia as of midday.
The Nikkei 225 is just 0.06% higher, but the Kospi has fallen by 1.43%. The Kospi has been led lower by heavy selling of Samsung shares as the Vice-Chairman is released from prison today. Additionally, some nerves over the virus and China appear to be affecting sentiment, as has been government guidance asking people not to travel this long weekend to dampen Covid-19 exposure, with cases in South Korea still climbing.
Government virus containment measures across China, notably at Shanghai and Ningbo ports, and the now ever-present threat of government regulatory action, especially after this week’s five-year plan release, are weighing on China equity markets today. The Shanghai Composite and CSI 300 are 0.25% lower, and I suspect China’s “national team” may be doing a bit of weekend “smoothing.” That is because Hong Kong, home to many of China’s tech-heavyweight listings, has fallen 0.90% today, having been quite a bit lower earlier in the session.
Singapore has fallen 0.70% with its high beta to China, being led lower by the big local banks. Likewise, Taipei has also fallen by a hefty 0.85%. Kuala Lumpur is just 0.05% lower after Q2 GDP flattered to deceive, with Bangkok down 0.30% and Manila lower by 0.40%. Australian markets are bucking the trend as commodity prices remain firm and local markets continue to focus on the Wall Street rally. At the same time, ignoring the ever-expanding regional virus lockdowns, which also enveloped Canberra yesterday. The ASX 200 has risen by 0.50%, while the All Ordinaries is 0.40% higher, capping off a pretty good week for Australian equities.
European markets may have some background China nerves. Still, a quiet data calendar should see them follow Wall Street higher this afternoon, with the US and Europe assessing Asia’s travails as a local problem and not a global threat at this stage.
