Asian equity markets have been unnerved by the fall in US equity index futures this morning, with the region’s markets starting the day in the red. After a mixed session overnight, with the NASDAQ falling 1.25%, the S&P 500 falling 0.46%, with only the Dow Jones in positive territory, S&P 500 e-mini, NASDAQ and Dow Jones futures are all 1.0% lower in Asian trading.
Asia is solidly in the red, with the Nikkei 225 down 0.70% and the Kospi down 1.0%. In China, the Shanghai Composite and CSI 300 are 0.70% lower, with the Hang Seng down 1.70%. Singapore has traced a slight gain of 0.30% after a recovery in Non-Oil Export data this morning. Jakarta and Kuala Lumpur are 0.30%, and the Sydney markets are 0.70% lower.
There is no particular news driving the fall in equities, notably the US ones. Overshadowed by the Fed noise was a weak US Retail Sales, which rose by only 0.60% in August, well below the rise of 1.0% expected. Although it is only one month’s dataset, some discomfort over the US recovery could be setting in. With Washington, DC paralysed on the stimulus front, government cheques finished, Covid-19 rampant, along with hurricanes and forest fires, the US may have seen the best of its easy wins for the initial recovery for now. The retail sales data may be the first sign that all those factors are starting to weigh and emphasises the urgency for Capitol Hill to get its act together.
It appears that with the FOMC behind us and with no real surprises, profit-taking has set in as long positioning is reduced ahead of US employment data this evening. As I have stated previously, after the US equity rout last week, markets can anticipate a lot more two-way price action in the future, as opposed to the linear price action of the previous six months.
Asian stock markets will remain under pressure today unless US index futures recover some of their losses across the session.