Asia markets cautious in holiday-thinned trade
Friday’s price action on Wall Street was somewhat jumbled amid month-end rebalancing flows by institutional investors and taper-talk from Fed Governor Robert Kaplan. On Friday, Kaplan said that there are excesses and imbalances in financial markets and the Fed needs to start discussing tapering.
The S&P 500 fell 0.72%, while the NASDAQ fell 0.85%, with the Dow Jones retesting 0.53%. That left the major indices flat to slightly lower for the week, even as they recorded solid monthly gains.
If anything, the price action suggests that investors are nervous at these heady levels and hyper-sensitive to any tapering headlines, no matter who makes them. Equities are not the only asset class to be behaving that way to be fair, as we shall see.
US index futures have risen by between 0.20% and 0.30% in Asia, but that hasn’t lifted sentiment in holiday-thinned markets, nor has the robust PMI data. One exception is Hong Kong was 1.40% lower. The source of its woes appears to be a continuing stream of negative headline regarding the mainland Government and China big-tech companies, many of which are listed in Hong Kong.
Singapore was also suffering as investors took fright at widening community cases in its latest COVID-19 outbreaks. The government signaled over the weekend that it was preparing to reimpose restrictions if the outbreak increases. The STI has fallen 1.40% today as investors fear the impact on the City-state’s fragile domestic recovery.
Elsewhere, Kuala Lumpur and Jakarta were 0.35% lower, Taipei has fallen 1.50% on localized COVID-19 fears as well. At the same time, South Korea’s KOSPI, and Australia’s All Ordinaries and ASX 200 were all unchanged for the day.
Looking at the COVID-19 reactions around Asia, it is hard to see India’s Sensex rallying later today. European markets should remain relatively immune, though, with PMI data likely to support modest gains.