Wall Street ran out of upward momentum overnight after a series of impressive buy-everything sessions over the past week. The price action looks corrective and not structural, but the S&P 500 finished 0.68% lower, the NASDAQ lost 0.92%, and the Dow Jones fell by 0.75%. US index futures have continued south, adding to exit door clamour in Asia.
Japan is leading the region lower, and the Nikkei’s travails appear to be spilling over into other regional bourses to a lesser extent. The Nikkei 225 has fallen 2.10% after the government announced that Tokyo would enter a Covid-19 state of emergency starting on the Apr. 29. I am slightly confused as to why Tokyo, having asked for the declaration, needs a whole week’s notice of it starting. Doubts are no doubt resurfacing that the Olympic Games will be imperilled if the situation continues to escalate.
Elsewhere regional markets are on the back foot as well, with the KOSPI falling by 1.40% and the Hang Seng falling by 1.70%. Notably, mainland China’s Shanghai Composite and CSI 300 are unchanged in a sea of red today, hinting that China’s state-backed “national team” is “smoothing” bearish volatility.
Overall, the price action looks corrective after a strong performance over the past week by equities in a market being driven by short-term risk sentiment. A thin data calendar means that the status quo is likely to continue for the remainder of the week, although markets will have more to get their teeth into over the next two weeks, including rate decisions from the Bank of Japan and the FOMC. As long as US 10-year yields remain stable, buying the dip will likely win the day on a weekly horizon.
Wall Street Losses Echoed In Asia
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