Early HK/China Strength Runs Out Of Steam

The early positive impulse to regional equities has given way to a more cautious stance as the session has progressed. The HSI is back to flat after being up by over 1% at one stage. Mainland indices are also back to slightly in the red. Trends are mixed elsewhere, although most indices are away from best levels. US futures are modestly positive, but only just.

• The early impetus was higher for China/HK stocks. An end to the mask mandate in HK aided sentiment early (although this was expected). Politico also reported that US President Biden won't ramp up investment restrictions into China, but instead focus on increased transparency. This is a positive, albeit at the margins.
• Gains ebbed as the session progressed. Tomorrow, we have important China PMI data for Feb, while this weekend the People's Congress begins. Hence this may be keeping some funds on the sidelines until we have greater clarity on the outlook.
• Elsewhere, the Kospi is +0.50% firmer, in line with better tech tone from Monday's session, but we are down from earlier session highs. The Nikkei is +0.12% higher at his stage.
• The ASX 200 is +0.46%, led by materials stocks, while better retail sales data, also helped staple stocks at the margin.