The selling of Asian ETFs overnight has been less aggressive than previous sessions where the two-day change still holds positives for most of the markets.
The Asian indices, other than Japan, are proving to be rather resilient in this EM sell-off period.
While the turmoil kicked off by EM, the uncertainty of the US labour market has added pressure in the global equity markets.
Moving into 2014, the working premise for a stronger global economy was the bullish projection of the US economic growth.
A level of expectation was embedded in the labour market as both investors and Americans wanted to see a real improvement.
The diverging information last night from the ADP employment showed companies added fewer jobs and the gauge of service industries increased, indicating that this recovery is non-linear. The main issue with the job market isn’t necessarily the number for January of 175k, expectation was 185k.
The struggle to gain an upward momentum that is the cause for pause. There are questions raised on whether this would translate to a lower productivity, regardless of the reasons on why there are less Americans in the workforce.
While the weather may be the reason attributed to the temporary decline in companies hiring, further reports from the labour market will be closely watched to see whether this is temporary or not. A weak NFP would add to the challenge of the basic premise and rattle the assumption that fundamental economic growth in the US will drive global markets this year.
The debate on whether this is a healthy correction or not will continue, it is clear that the equity markets are in correction mode right now.