Covid jitters weigh on Asian equity markets
Regional equity markets continue to mostly sag on Tuesday as pandemic concerns across the region weigh, wearing recovery nerves thin. In contrast, on Monday the US enjoyed a mostly upbeat session, as technology was lifted by Facebook's (NASDAQ:FB) rally overnight.
Under the gloss, though, US markets are expressing pandemic concerns and a potentially slower global recovery. The Covid-19 delta variant is having a worldwide impact, with cases rising in the UK and Russia and appearing in Europe. There was a notable rotation from growth to value as the S&P 500 rose 0.23%, while the NASDAQ jumped 0.98%. By contrast, the Dow Jones, with a much higher beta to a recovery in the real, as opposed to the digital economy, fell by 0.44%.
In Asia, futures on all three US indices have slipped by around 0.20%, deepening the Asia malaise. The Nikkei 225 has fallen by 0.95%, while the KOSPI has eased lower by 0.35%. Mainland China’s Shanghai Composite is 0.75% lower, with the CSI 300 retreating by 1.0%. Hong Kong has followed suit, moving 0.70% lower. I expect China’s “national team” to emerge to stabilize mainland markets as the sell-off accelerates, especially in 100th birthday week.
Singapore has dropped by 0.75%, while Kuala Lumpur is down just 0.10%, with negativity perhaps dampened by the latest government fiscal package. However, Jakarta is bucking the trend, rising 0.70% today, as the government announced vaccinations for teenagers. Taipei remains unchanged.
Australian markets have headed south after Perth entered a snap four-day lockdown and other states tightened restrictions. Delta-variant worries have left Australian markets on edge, with three state capitals in lockdown now. As a result, the ASX 200 has fallen by 0.50%, with the All Ordinaries falling by 0.70%.
European markets are also facing the pandemic blues and headed south yesterday along with Asia. I expect more of the same this afternoon and the divergence between the US and the rest of the world to continue over the next 48 hours.