Falling Asian stocks belie market optimism today

Asian equities are weaker as they play catch up overnight losses in Wall St

ForexLive

At the same time, US equity futures are up 0.5%, while Treasury yields are also up, with yields at 10 years higher by 1.4 basis points, now down to 2.415% . Thus, despite the losses recorded so far in Asian trading, this does not give a real impression of the optimism that is built on the markets ahead of the European trading.

The Hang Seng index, which fell 1.6% at the time of the break, is an exception to the decline today, as it catches up losses in the space of two days due to the closing of the Hong Kong markets yesterday.

One of the recurring themes in the markets last year was the ability of risky assets to rebound quickly and sharply after each setback in US-China trade rhetoric. Now this theme will be tested again, but this time, investors will also have to grasp the consequences of a trade stalemate for a sluggish global economy.

So it will be something to watch for. Greed vs Fear – the endless battle.

A good thing for Asian stocks and the risk in general is however that the sale seems to be rather tense now, if you go through the RSI on 14 days:

But I think the biggest question will be whether investors believe that emerging markets and Asian equities are cheap, despite the decline last week. At some point, you would expect a decent retracement, but given the current trade tensions, I imagine it will be difficult for equities to achieve a sustainable rally at least in the coming weeks.