More Caution Amid Higher Yields

The tone in regional equities has been more cautious today. Cross-asset headwinds from firmer US yields and a stronger USD have weighed at the margins. US equity futures are tracking lower at this stage (-0.36% for Eminis and -0.48% for the Nasdaq).

• After strong gains yesterday, we have seen China and HK bourses consolidate today. The HSI is down by around 0.4% at this stage, with the underlying tech index down 1%. This only unwinds a part of yesterday's +6.64% gain. Mainland China stocks are modestly in positive territory. The proximity of the NPC may also be driving some caution in markets.
• Trends have been mixed elsewhere, the Nikkei 225 close to flat, likewise for the Taiex. The Kospi has outperformed up near 0.80%, although markets were closed yesterday, so this may reflect some catch up. Offshore investors have added $136.8mn to local shares.
• Indian shares are tracking lower in the first part of trade, the Nifty down by 0.50% at this stage. The index continues to battle the 200-day MA, which remains nearby (17397.50, versus current levels of 17362).
• The trend is more positive in SEA, with the Philippines the bourse the standout at +1%. Positive earnings results are fueling broad based gains for the index.