Asian Equities Strike A Cautious Note

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Asian markets mixed after gains on Wall Street

U.S. earnings pushed Wall Street’s main indexes to another record close overnight, with the FOM gnomes either complacent or completely ignoring the event risk in tonight’s FOMC policy decision. The S&P 500 was up 0.37%, the Nasdaq was up 0.34%, and the Dow Jones was up 0.39% with stars from Pfizer and Avis. U.S. futures are stable in Asia.

Japanese markets are closed for a holiday today, with Wall Street’s nightly gains elevating Asia to a cautiously higher ex-China and South Korea. The Kospi fell 1.15% this morning as the prime minister said the government could not pay another round of universal subsidies from Covid-19. Elsewhere, the image is mixed. Singapore is 0.25% lower despite positive large bank revenues, and Kuala Lumpur is declining by 0.25% as lower oil prices and government tax measures weigh. Taipei is up 0.30%, with Jakarta up 0.15%, while Bangkok is flat.

Chinese markets are mixed despite Caixin Services ’positive PMI data today. That has a higher beta to the CSI 300, which regularly rose 0.25% this morning, but the Shanghai Composite fell 0.45%. Hong Kong fell 0.90%. Chinese markets are reacting cautiously thanks to government warnings to households to store key items, and with strengthening Covid-19 restrictions in parts of the country. Throw in two Evergrande overseas payments before 6 p.m., and FOMC tonight, and there aren’t many reasons for continental investors to get excited. China’s “national team” is likely to appear on the offer if the equality withdrawal accelerates however.

Below, Australian yields and the Australian dollar fell after the RBA’s policy decision yesterday. That pushed back the sadness of lower iron prices and a Kiwi horse winning yesterday’s Melbourne Cup. With the RBA still in dovish mode, the ASX 200 rose 0.85%, with the All Ordinary climbing 0.80%.

We’ve probably seen the best of the gains being made in Asia today, as investors in the region are adopting a cautious stance in the FOMC. U.S. monetary policy has a very direct impact on the Asian market, especially with their lot of gross U.S. dollars. Similarly, European equities are likely to have a neutral opening with an empty data calendar ahead of some successful U.S. releases culminating in the FOMC decision.

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