China lockdowns weigh on Asian markets

Wall Street went back into recession mode overnight, with the growth-centric Nasdaq underperforming as tech heavyweights were sold off. The Nasdaq’s fall has translated directly into weakness with the correlated North Asia heavyweights, while the rest of Asia and Pacific has escaped mostly unscathed. Covid-19 fears in China continue to hang like a dark cloud over the region, however.

Overnight, the S&P 500 fell by 1.15%, with the Nasdaq tumbling by 2.26%, while the Dow Jones finished 0.52% lower. The giant Non-Farm Payrolls number has given Wall Street food for thought on US rate hikes, with the FOMC looming at the end of the month, even as haven flows sent US yields lower across the curve. In Asia, US futures continue to fall with futures on all three major indexes down by around 0.50%.

The continuing retreat of US futures, along with the Nasdaq slump overnight and lockdown fears in China sees most of Asia lower. Japan’s Nikkei 225 has slumped by 2.0%, with South Korea’s Kospi dropping by 1.20%. In mainland China, lockdown fears see the Shanghai Composite 1.0% lower, with the CSI 300 falling by 1.20%. Hong Kong’s Hang Seng is also 1.20% lower.

In regional markets, a holiday in Singapore and Malaysia yesterday see the Straits Times managing to remain unchanged, but the KLCI has fallen by 0.45%. Taipei has tumbled 2.55% lower. Jakarta is down just 0.05%, with Bangkok and Manila easing by 0.40%. A lower Australian dollar seems to be boosting the resource-heavy Australian markets today. The ASX 200 is 0.20% higher, while the All Ordinaries has gained 0.40%.

Asia is roughly mirroring the Wall Street growth/value split overnight. Unfortunately, European markets are unlikely to find much solace because of that. Energy concerns and a slump by Wall Street overnight are likely to see European bourses open well in the red this afternoon.

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