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Asia Morning Update: Light Asian session

A mixed start to Thursday is expected for Asian bourses with several markets away on holiday. The focus may instead be allotted to leads post Asian hours. 

US Building
Source: Bloomberg

Where are the dips?

In more of the same enthusiasm, investors continued to bid up US indices with the S&P 500, Dow Jones and NASDAQ charging on with their record highs. A notable shift in sectoral performance had been the catch-up played by the defensive utilities and real estate sectors on Wednesday as the S&P 500 index’s put-call ratio creeped higher. This had arguably been one of the longer stretch in which we have seen the comprehensive S&P 500 index chalk up gains, with Wednesday marking the seventh consecutive session, and it would be no surprise to find the return of some concerns over a correction. Having said that, US indices certainly exhibits a remarkably strong trend and investors would likely be keen to buy up any dips, whether this stems from a fear of missing out or otherwise.

On Wednesday’s data releases, the heightened focus had yielded little impetus for a shift for the US dollar. September’s ADP employment change, which leads Friday’s payrolls numbers, arrived matching consensus. Although I do suspect that the market had been prepared for disappointment with hurricane effects in mind. Meanwhile, August’s ISM non-manufacturing index outdone expectations to claim the highest print since August 2005. This would all arguably have created upward pressure for the flat lining USD index, and a reasonable explanation for the trend may be the anticipation of Friday’s jobs data releases, one that could have repercussions for equity markets as well.


Asian markets

Despite the abovementioned, Asian equities may see a flat start to a light day. Joining China and South Korea on market holiday on Thursday would be the Hong Kong market, which had been a breeding ground for bullish sentiment since the start of the week. The absence of which may leave regional markets to meander along a relatively quiet Thursday.

Asian markets as a whole have seen significant outflow in the month of September as the US dollar reversed course. While the regulatory changes in China have helped to counter some of these stress for the Hong Kong bourse, Asian markets may continue to find this trend a plausible risk into the year end. Both economic fundamentals and Q3 earnings for the region would have to step up for prices to match much of the upside potential that investors still see in the region.

Watch for key items post Asian hours including the European Central Bank meeting minutes from September while US’ August trade balance, factory orders and durable goods will also be released.


Yesterday: S&P 500 +0.12%; DJIA +0.09%; DAX +0.53%; FTSE -0.01%

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