Asia markets cautious in holiday-thinned trade

Friday’s price action on Wall Street was somewhat jumbled amid month-end rebalancing flows by institutional investors and taper-talk from Fed Governor Robert Kaplan. On Friday, Kaplan said that there are excesses and imbalances in financial markets and the Fed needs to start discussing tapering.

The fell 0.72%, while the fell 0.85%, with the retesting 0.53%. That left the major indices flat to slightly lower for the week, even as they recorded solid monthly gains.

If anything, the price action suggests that investors are nervous at these heady levels and hyper-sensitive to any tapering headlines, no matter who makes them. Equities are not the only asset class to be behaving that way to be fair, as we shall see.

US index have risen by between 0.20% and 0.30% in Asia, but that hasn’t lifted sentiment in holiday-thinned markets, nor has the robust PMI data. One exception is was 1.40% lower. The source of its woes appears to be a continuing stream of negative headline regarding the mainland Government and China big-tech companies, many of which are listed in Hong Kong.

was also suffering as investors took fright at widening community cases in its latest COVID-19 outbreaks. The government signaled over the weekend that it was preparing to reimpose restrictions if the outbreak increases. The STI has fallen 1.40% today as investors fear the impact on the City-state’s fragile domestic recovery.

Elsewhere, and were 0.35% lower, has fallen 1.50% on localized COVID-19 fears as well. At the same time, South Korea’s , and Australia’s and were all unchanged for the day.

Looking at the COVID-19 reactions around Asia, it is hard to see India’s rallying later today. European markets should remain relatively immune, though, with PMI data likely to support modest gains.

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