Senior US and China officials to meet next week
The passing of the Biden stimulus through the House saw more cyclical rotation flows on Wall Street overnight. The Dow Jones rose 1.46% to a new record high, while the S&P 500 climbed 0.60%. The tech-heavy NASDAQ failed to find any tailwinds, though, despite US inflation data being slightly softer, it finished 0.05% lower. Overall, the NASDAQ performance suggests that inflation fears persist on Wall Street, amplified by the Biden stimulus and noise increasing about the President’s proposed follow-on infrastructure package. The NASDAQ remains deep in corrective territory from a technical perspective.
However, northern Asian markets are outperforming this morning after a meeting between US and China officials was announced for next week. Hopes that trade relations may improve between the two superpowers has drowned out inflation nerves today, with US index futures also performing strongly.
Although the Nikkei 225 has climbed just 0.42% this morning, mainland China’s Shanghai Composite and CSI 300 have leapt by 2.30%, and the KOSPI has jumped by 2.10%. Fellow high trade beta markets Hong Kong and Taiwan have rallied 1.60% higher.
Singapore has risen 0.85%, with Jakarta climbing 1.05% with Bangkok up 0.20%. Having outperformed this week, Kuala Lumpur has retreated by 0.65% as investors book profits. Financials and travel sectors have led Australian markets lower this morning, with the federal government tourism support package meeting an underwhelming reception. The ASX 200 and All Ordinaries have eased 0.15% lower.
The picture is mostly a positive one in Asia, led by the 2020-darling markets of North Asia, that have been under the pump this week. The more cyclical ASEAN markets show a lesser degree of exuberance today, signalling that European markets will rise cautiously, but not with Greater China and South Korea’s same explosiveness. Although US-Sino talks are a positive development, the inflation genie has not gone away, and sentiment could easily change direction once again if the US 30-year auction is received poorly tonight.