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Asian equities mostly lower

Equities paused the US overnight, the S&P 500 falling slightly by 0.06%, the Nasdaq falling 0.34% which the Dow Jones managed to edge 0.20% higher. The price action looks more like a correction to the cyclical rotation seen last week than a bond market move. Higher US Retail Sales and PPI data tonight could deepen the correction, however. The latter release may provide more hints about inflationary pressures accruing in the global economy.

Nevertheless, the jump in US 10 and 30-year yields overnight was enough to frighten Asia, which moved higher while the US and China were on holiday. The Nikkei 225 has fallen 0.60%. Japan’s Tankan Survey printed higher with Exports and Machinery Orders well above expectations. Imports though fell by a much worse 9.50% YoY in January. The data suggests that domestic demand remains muted even as the export-facing sectors fire on all cylinders. That is a similar pattern seen across much of Asia, including China and South Korea. There will be limits to US stimulus and Covid-19 vaccines’ economic peace dividend until borders reopen, something unlikely to pick up pace until later in the second half of the year.

The Kospi is down 1.13%. Mainland China remains closed, with the Hang Seng unchanged today.

Taiwan is bucking the trend, playing catchup to the rally while it was on holiday, rising 3.0% this morning. Elsewhere though, equities are lower. Singapore has fallen 0.45%, with Kuala Lumpur down 0.50% and Jakarta 1.10% lower. Australia also sees profit-taking the ASX 200 down 0.50%, and the All Ordinaries are falling 0.35%.

Overall, today’s picture looks corrective after a strong run higher by regional equities in recent sessions, especially when Friday’s move higher in US yields was ignored entirely by markets. US data could deepen the malaise, but one suspects it will only take some positive noises on the stimulus package from Washington DC for all to be forgiven.