ASIAN EQUITIES RISE, FOLLOW US LEAD
Lower for longer interest rates is the mantra of the day in Asia which has followed Wall Street’s Friday lead. New York had a positive session with the S&P 500 rising 0.67%, the NASDAQ increasing 0.60% and the Dow Jones climbing 0.56%.
Japan’s Nikkei 225 has quickly regained the losses suffered after Abe’s resignation on Friday, jumping by 1.97% this morning. The Nikkei is testing resistance at 23,350 this morning, with a daily close opening up further gains to 24,000 in the days to come. South Korea’s KOSPI has been weighed down by negative data this morning but has still eked out a 0.15% gain.
In China, the Shanghai Composite is up 0.90% and is testing resistance at 3460.00 this morning, with a daily close above signalling further gains to 3600.00. The CSI 300 is 0.67% higher and testing resistance at 4900.00. The Hang Seng is 0.95% higher, having risen above its 200-day moving average for the first time since late June today.
Across regional Asia, Thailand is 0.80% higher, Singapore is 0.50% higher, and Jakarta is flat, as record Covid-19 cases weigh down sentiment. Malaysian markets are closed for a public holiday.
Australian markets are also underperforming as China officially opens its Australian wine dumping probe, and local markets fret about Australia/China relations. Nevertheless, both major indices have edged slightly higher. The ASX 200 and All Ordinaries have risen 0.10%.
Although a UK holiday today will slow activity, European equities should follow suit and resolve higher. With markets embracing the lower for longer rates scenario from the Federal Reserve, and indeed every major central bank in the world, the search for yield has been given yet another sugar boost.
On Tuesday, we’ll get the dump of PMI data worldwide, which should provide clues about the trajectory of the global recovery. I expect the data to show that South-East Asia and Europe will outperform in general, although modestly so. If Covid-19 continues its worrying comeback in Europe, though, the going may be much harder for Europe in September.
