A mixed day for Asia

Asian markets showing caution

US equities traded sideways overnight with the S&P 500 edging 0.16% higher, the Nasdaq falling -0.24% and the Dow Jones rising 0.27% today. Early Asian markets were under pressure, but a rebound of sorts has happened after a deal to avert a US government shutdown was announced, and China’s PMIs showed stability after last month’s poor showing. US index futures have rallied strongly as a result, taking the edge of Asian concerns. The S&P futures have jumped 0.50% with Nasdaq futures rallying 0.60% and Dow futures climbing 0.40%.

The Nikkei 225 and Kospi have reversed early losses, but the Nikkei 225 is still down 0.40% even as the Kospi climbs into the green by 0.10% with both countries releasing soft economic data this morning.

In China, news that Evergrande had sold a banking stake yesterday and had resumed work on some housing projects has also given markets some respite. The PBOC also added a small liquidity injection. Evergrande and China’s energy crunch still hang over equity markets, but mainland markets seem intent on going into the week-long holiday on a positive note. The Shanghai Composite has risen by 0.40%, while the CSI 300 is 0.50% higher. Hong Kong is faring worse though, with the Hang Seng falling by 1.10% so far.

Regional Asia has also reversed its early cautious sentiment after the US government funding announcement, helped along by lower currencies. Singapore has risen by 0.45%, while Taipei is 0.35% higher. Kuala Lumpur has edged 0.25% lower with Bangkok 0.10% lower, even as Manila climbs 0.70% higher and Jakarta rises by 0.85%. The US announcement, a lower currency, decent data and higher iron prices have sparked a broad rally in the ever-optimistic Australian markets today. The ASX and All Ordinaries have leapt higher by 1.30%.

With European currencies and the pound being slammed overnight by the US dollar juggernaut, pleasing for exporters, and with Asian markets recovering on the US government funding news, European markets should open higher this afternoon. With the quarter-end and month-end upon us, I expect rebalancing flows to cause choppy sessions in both Europe and the US on a quiet data day.