Morning Auction: Sell the Tear


People walk past an electronic screen showing Japan’s Nikkei stock price index at a conference room in Tokyo, Japan June 14, 2022. REUTERS/Issei Kato/File Photo

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Sep 5 (Reuters) – A preview of the day ahead in Asian markets from Jamie McGeever

Wall Street’s plunge into the red Friday night sets a negative tone for Monday’s Asia open, a stark reminder that investors are still far more inclined to sell into pockets of strength in riskier assets right now than push them higher.

August’s Purchasing Managers’ Index (PMI) reports from Australia, Japan, China and India could deepen or lessen the general sentiment of gloom, but the US close last week suggests that any relief might be fleeting.

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US markets are closed for the Labor Day holiday, so liquidity will be lighter than normal, while European markets digest the news that Russia has scrapped the Saturday deadline to resume flows via an important gas supply route to Germany.

The impact of the energy crisis in Europe on global financial markets cannot be ignored.

It wasn’t supposed to be like this after Friday’s nonfarm payrolls report described a US jobs market ‘Goldilocks’ scenario for the Fed – slowing but still solid job growth and cooling inflationary pressures due to slowing earnings growth.

But equities failed to hold on to early gains, despite falling bond yields, implied interest rates and the dollar.


The dollar will be closely watched, having hit a 24-year high on Friday against the yen above 140.00 yen. Japanese Finance Minister Shunichi Suzuki said G7 financial leaders did not discuss foreign exchange on Friday, but insisted that sharp movements in exchange rates were not desirable.

Meanwhile, US-China tensions continue to plague regional sentiment. The State Department on Friday announced a potential $1.1 billion sale of military equipment to Taiwan, a move the Chinese Embassy in Washington said “seriously jeopardizes China-US relations as well as peace and stability in the Taiwan Strait”.

All in all, a difficult environment for the Asian markets on Monday.

Key developments that should further guide markets on Monday:

Australian Services, Composite PMI (August, final)

Japan Services, Composite PMI (August, final)

China Caixin Services PMI (August)

India Services PMI (August)

South Korea’s foreign exchange reserves (August)

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Reporting by Jamie McGeever in Orlando, Fla.; Editing by Lisa Shumaker

Our standards: The Thomson Reuters Trust Principles.

The opinions expressed are those of the author. They do not reflect the views of Reuters News, which is committed to integrity, independence and non-partisanship by principles of trust.


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