It’s been a positive start for equity markets across Asia as the new trading week gets underway. Those fractionally better than expected non-farm payrolls on Friday have served to set the pace, although local factors have also been very much in play. Pro-democracy protests in Hong Kong appear to be dwindling which has served to cheer the Hang Seng, whilst another push past 110 on USD/JPY – even though it was short lived – helped boost the Nikkei once again. The Shanghai index remains closed for the Chinese national day holidays.
Wall Street is forecast to extend Friday’s gains as trade gets underway later, although there’s little on the economic calendar that is likely to provide any fresh direction in the short term. However, the risk has to be that with the Fed still finding cause to justify a tightening of monetary policy – and with the greenback gaining strength too – then traders will find justification for another bout of profit taking. Rising equity prices and an appreciating currency make for an uneasy partnership – reaching for the sell button could be the obvious next step.