Covid jitters weigh on Asian equity markets

Regional equity markets continue to mostly sag as pandemic concerns across the region weigh wear recovery nerves thin. In contrast, the US enjoyed a mostly upbeat session, as technology was lifted by Facebook’s rally overnight. Under the gloss, though, US markets are expressing pandemic concerns and a potentially slower global recovery.  The Covid-19 delta variant is having a worldwide impact, with cases rising in the UK and Russia and appearing in Europe. There was a notable rotation from growth to value as the S&P 500 rose 0.23%, while the Nasdaq jumped 0.98%. By contrast, the Dow Jones, with a much higher beta to a recovery in the real, as opposed to the digital economy, fell by 0.44%.


In Asia, futures on all three US indices have slipped by around 0.20%, deepening the Asia malaise. The Nikkei 225 has fallen by 0.95%, while the Kospi has eased lower by 0.35%. Mainland China’s Shanghai Composite is 0.75% lower, with the CSI 300 retreating by 1.0%. Hong Kong has followed suit, moving 0.70% lower. I expect China’s “national team” to emerge to stabilise mainland markets as the sell-off accelerates, especially in 100th birthday week.


Singapore has dropped by 0.75%, while Kuala Lumpur is down just 0.10%, with negativity perhaps dampened by the latest government fiscal package. However, Jakarta is bucking the trend, rising 0.70% today, as the government announced vaccinations for teenagers. Taipei remains unchanged.


Australian markets have headed south after Perth entered a snap four-day lockdown and other states tightened restrictions. Delta-variant worries have left Australian markets on edge, with three state capitals in lockdown now. As a result, the ASX 200 has fallen by 0.50%, with the All Ordinaries falling by 0.70%.


European markets are also facing the pandemic blues and headed south yesterday along with Asia. I expect more of the same this afternoon and the divergence between the US and the rest of the world to continue over the next 48 hours.