Asia equities mixed after Wall Street retreat
Wall Street eased overnight as investors used tech regulation concerns and rising US yields as an excuse to take risk off the table and book some profits. The tech-heavy NASDAQ suffered worst, falling 1.23%, while the S&P 500 lost 0.63%, and the Dow Jones eased by 0.29%. My overriding impression is that with equity prices at sub-orbital levels, it isn't going to take a lot at the moment to spook investors. The rise in US yields is also giving food for thought and bringing some welcome two-way price action as a reality check to the FOMO-nistas inhabiting stock markets everywhere.
In Asia, the picture has been rather more mixed with large fast-money flows very much in evidence in China and South Korea today. The Nikkei 225 has edged just 0.25% higher this morning, but South Korea's KOSPI has fallen 2.0%. Having rallied on retail fast money yesterday, those gains have been quickly unwound but the same this morning after the tech-heavy NASDAQ suffered overnight, notably Twitter (NYSE:TWTR) and Tesla (NASDAQ:TSLA). The positive outlook for South Korea has not suddenly changed; it has just got noisier.
Much the same pattern is being repeated in Mainland China today. Having retreated ahead of the retail horde yesterday, who spent most of the session loading up on Hong Kong equities instead, the retail dip-buyers have emerged in force today. That has sent the Shanghai Composite 1.30% higher today, with the CSI also rallying by 1.10%. Billions of dollars poured down the stock connect pipe from the Mainland into the Hang Seng yesterday, pushing markets higher. With Mainland investors' attention on buying the dip at home, the Hang Seng has climbed just 0.65% today.
Singapore and Bangkok eased 0.35% in line with Wall Street overnight. Manila and Taipei have both fallen by 0.45%, while Jakarta has climbed just 0.20%. Kuala Lumpur has declined 0.75% after the King declared a state of emergency, although it spiked lower on the announcement. The parking of political uncertainty temporarily under the decree will likely be positive for Malaysian markets once the dust settles. Malaysia's politicians being a semi-permanent sea anchor on the countries appeal as an investment destination. In Australia, markets have also fallen slightly following the bank and gold miners’ rout yesterday. The ASX 200 and All Ordinaries have eased 0.20%.
Europe is likely to follow Wall Street's lead and open slightly lower today in sympathy. With a light data calendar, volatility will come from investor sentiment and headlines. That is likely to be one of risk-reduction, capping gains this afternoon.