Nikkei jumps but Chinese markets drifting
The return of China and Japan from holiday has seen a mixed start to the day, after Wall Street finished inconclusively, with its early tech rally petering out into modest cyclical rotation.
The S&P 500 closed just 0.07% higher, while the NASDAQ retreated 0.37% at the expense of the Dow Jones, which rose 0.28%. Futures on all three edged ever so slightly into the red in Asia after early gains. US markets also appear to be banking on a bumper Non-Farm Payrolls number, leading to recovery trade rotation on a modest scale.
In Asia, the Nikkei 225 leapt nearly 2.0% higher as investors returned from holiday. With COVID-19 concerns still apparent, the rally was surprising. I can see no other explanation other than retail mania expecting robust US data on Friday. The KOSPI also rallied 0.70%, and Taiwan rallied by 1.10%.
Mainland China’s return has been altogether more muted, with the PBOC withdrawing liquidity and G-7 statement and Australian political temperatures on the rise once again. The Shanghai Composite edged 0.10% higher, while the Shanghai Shenzhen CSI 300 edged 0.10% lower. Hong Kong gave up early gains in sympathy and was unchanged for the day (at time of writing).
Singapore rose 0.56% today, as its community COVID-19 situation appears to be stabilizing, with the new social restrictions taken quickly in their stride. More likely, though, was that dip-buyers appeared after a few negative sessions, boosted by an 18% rise in profits from UOB. Across ASEAN, Malaysia has fallen 1.10% while Jakarta rose 0.45%.
By contrast, Australian markets were in retreat. The China lease of the Darwin port saga is escalating as Reuters reports a China state planner says to suspend indefinitely all activities under the China-Australia strategic economic dialogue mechanism.
Both equities and the Australian dollar have fallen on this news, with Sino-Australia relations a definite sell on rallies. The All Ordinaries declined 0.40%, while the ASX 200 was lower by 0.55%.
The lack of uniformity in Asia Pacific’s price action suggests that regional markets are positioning themselves for the US Non-Farm data tomorrow, leading to certain randomness in the price action. The last-minute jockeying is likely to extend into tomorrow’s session.