Asian equities do not pass Go

Asian equity markets are a sea of red today, including US futures, as Covid-19 fears hollow out investor sentiment after a weak finish by Wall Street on Friday night. On Friday, despite strong US Retail Sales, the S&P 500 fell 0.75%, the Nasdaq by 0.80%, and the Dow Jones by 0.86%.


US equities appear to have run out of momentum for now, despite US long-dated bond yields remaining stubbornly offered as the bond market refuses to buy into the inflation story. The loss of momentum seems more corrective than structural, with vast amounts of good news baked into stock prices. With the delta surge globally, the certainty of the recovery story is hit and has been enough to swing momentum for now.


Of the three leading indices, the S&P 500 is looking the most vulnerable, lying just above its ascending March 2020 support line, today at 4300.00. Picking the top in the S&P 500 hasn’t treated me well, though, so readers should take my observation with a grain of salt.


Dow futures are 0.50% lower in Asia, with the S&P 500 e-mini and Nasdaq futures down 0.25%. Across Asia, though, the picture is ugly, with regional investors clamouring to move into cash on the sidelines. The Nikkei 225 has fallen 1.30%, having traded lower intra-day after some athletes tested positive in the Olympic Village. The Kospi is down by 1.0%, while Taipei has fallen by 0.75%.


In China, the Shanghai Composite is 0.35% lower, with the CSI 300 down 0.75%. In Hong Kong, heavy with mainland tech and property companies, the Hang Seng has plummeted by 1.80%.


Renewed restrictions in Singapore sees local markets fall 0.85% today, with Jakarta down 0.55%. Weekend protests see Bangkok 1.20 lower today while Kuala Lumpur bucks the trend, rising 0.40%. Widening lockdowns in Australia see the ASX 200 and All Ordinaries both 0.90% lower.


With a dearth of tier-1 data this week, equity markets will be left to the tender mercies of the armies of fast-money FOMO-gnomes. The virus evolution will dominate intra-day panic/schizophrenia. Longer-term investors might choose this week to watch from the sidelines and spare their blood pressure.