Higher US yields boost Asia
Friday’s New York session was an odd one, with banks under pressure as the Federal Reserve signalled it would let the Supplementary Leverage Ratio (SLR) lapse at the end of the month. Price action was mixed as US 30-year yields eased somewhat, with Friday’s quadruple “witching hour” of futures and options expiries pushing volumes far higher than usual but leading to distorted price action. The S&P 500 finished just 0.06% lower, but the NASDAQ rose 0.76%, and the Dow Jones fell 0.71%.
S&P 500 and Dow Jones futures have headed South in Asia, but NASDAQ futures are slightly higher, in a rerun of Friday. Asia has ignored that for the most part and has started the week modestly higher, perhaps in part because US 10-year bond futures have rallied today.
The exception is the Nikkei 225, which has plummeted by 2.0% today as investors digest the implications of the BOJ’s intention to cease buying Nikkei 225 related ETFs, concentrating on TOPIX-linked ones. The Nikkei 225 carved through its 5-month support line at 30,100.00 on Friday and has moved deeper into correction territory today, targeting its 100-day moving average at 27.750.00.
Elsewhere in the Asia-Pacific, though, the picture is positive if modestly so in a no news is good news sort of way. Mainland China’s CSI 300 is 0.35% higher, with the Shanghai Composite 0.20% higher. Today’s small rally still leaves the CSI 300 precariously perched on its multi-month support line. At the same time, the Shanghai Composite crushed the same on the 8th of March and remains ensconced in downside correction territory. The Hang Seng is just 0.25% lower in directionless trading, as China’s tech clampdown weighs on Hong Kong-listed giants.
The KOSPI is flat, with Singapore and Taiwan are 0.35% higher, with Manila unchanged and Kuala Lumpur 0.15% lower. News that a trans-Tasman travel bubble is back on both governments’ agenda and a strong finish by the NASDAQ has lifted Australian markets. The ASX 200 climbing 0.75%, and the All Ordinaries rising 0.70%.
Overall, the picture for Asia is one of marking time while awaiting fresh inputs, likely to be delivered by the US and Europe. European and UK equities may have a more challenging time this afternoon, with the UK-Europe vaccine spat, and Eurozone lockdowns weighing on markets.