Wall Street pulls Asia lower

Asia equities dip, Australia moves higher

A lack of movement on the US fiscal stimulus package saw investors’ patience continue to wane overnight, spurring them to lock in recent profits, notably in large tech stocks. That saw Wall Street’s major indices ease lower as investors in the US joined those in Asia on the side-lines. The S&P 500 fell 0.66%, the Nasdaq fell 0.80%, and the Dow Jones fell 0.58%.

The lethargy on Wall Street has spilt over into Asian markets, which are mostly modestly lower. The Nikkei 225 has fallen 0.65%, with the Kospi 0.75% lower. In China, disappointment over President Xi’s speech yesterday has seen both the CSI 300 and Shanghai Composite flat for the session. In contrast, the Hang Seng has fallen 1.0% over Ant Financial IPO nerves and Evergrande concerns.

Singapore has fallen 0.50% along with Kuala Lumpur, but Australia’s ASX 200 and All Ordinaries have risen 0.50%. Federal stimulus, more accessible credit and high commodity prices continue to support Australian equities.

With a lack of headlines or data to spur excitement, investors are likely to continue to remain on the side-lines and are more likely to book profits and reduce risk than pile into new long positioning.

Over in Europe, financial markets appear far more focused on the Brexit talks. There is a possible crisis brewing, with the UK’s self-imposed deadline for an agreement occurring today. However, it seems that British Prime Minister Johnson will continue talking to the Europeans after all. The markets are optimistic that a deal will be reached, even if it is a “slim” agreement which will have to be filled in next year. There are serious gaps between the positions put forward by London and Brussels, notably fishing rights and state aid programmes. However, both sides realize that they will be worse off if an agreement is not reached, so there is pressure on both sides of the Channel to finalize a divorce deal and move on.