Asia in cautious mood, eyes US GDP
Asian equities continued to trade with a cautiously bullish bias, with one eye on US GDP today, after the FOMC stayed on message but was ever so slightly less dovish.
Notably, US index futures were rallying powerfully in Asian trading after blow-out Apple (NASDAQ:AAPL) and Facebook (NASDAQ:FB) results and after President Joseph Biden’s address to Congress passed without incident. Yet, Asian markets were refusing to join in.
On Wall Street overnight, a slightly less dovish FOMC statement if you looked very closely word-for-word pushed markets lower. The S&P 500 finished almost unchanged at 0.08% lower, the NASDAQ slid 0.28%, while the Dow Jones fell by 0.48%, weighed down by Boeing (NYSE:BA) woes.
All has been forgiven in Asia, though, with S&P 500 futures rose 0.60%, NASDAQ futures leapt by 0.95%, and Dow Jones futures rose 0.30%. The US earnings deluge continues today, although all eyes will be on Amazon’s results. If this week’s form continues, a result close to expectations will see Amazon (NASDAQ:AMZN) stock fall, while markets will reward a strong earnings beat.
In Asia, the Nikkei 225 and KOSPI were 0.30% higher while China’s CSI 300 was up 0.20%, with the Shanghai Composite unchanged. The Hang Seng was 0.65% higher as retail investors piled into China tech listings, while Taipei climbed 0.40%.
Singapore and Kuala Lumpur rose 0.15%, with Jakarta 0.25% higher. Australian markets were following US futures higher—the All Ordinaries was increasing 0.45%, while the ASX 200 climbed 0.30%.
This week’s best performer has been India’s Sensex, which was up 3.35% for the week. Both the Indian rupee and Sensex have benefited from buy-the-dip fast money flows, highlighting the wall of money globally looking for a home. With investors looking past the COVID-19 situation, rightly or wrongly, a dovish FOMC should see that trend continuing today.
Although Asia was gently bullish as US index futures powered higher, I expect the cautious tone to continue ahead of US GDP and China’s Manufacturing and Non-Manufacturing PMI’s tomorrow.
Three-day holidays in China and Japan next week are likely to dull activity after the China PMI release. With a tier-2 data calendar in Europe today, I expect markets to remain in US GDP wait-and-see mode also.