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China is the one bright spot for Asian equities today

The buy-the-dip rally yesterday quickly ran out of steam in New York as Tesla stock plummeted and  announced an impending ban on natural gas exports to Poland and Bulgaria. Although US data held steady, the miss in earnings by Alphabet has darkened the move and the overnight price action across asset classes suggested a full-on move to defensive positioning. US equities had a terrible day at the office. The S&P 500 fell by 2.80%, the Nasdaq tumbled b 3.93%, and the Dow Jones retreated by 2.38%. The S&P has fallen through its February lows, while the Nasdaq is in danger of testing its 4,100 February low. Only the Dow, with its value orientation, is holding steady, albeit in a 1-year sideways range.

In Asia, the giant falls overnight in US markets have proved irresistible to bargain hunters once again. US futures have edged higher. S&P futures have added 0.45%, Nasdaq futures 0.50%, and Dow futures 0.70%. The price action looks optimistically corrective in nature.

In Asia, China is the one bright spot as markets have risen in response to a slow day for Covid-zero headlines, and better than expected Industrial Profits data. In a rerun of yesterday, the Shanghai Composite has risen by 0.40% with the narrower Shanghai 50 gaining 1.25%. The CSI 300 has rallied by 1.13%, but tellingly, Hong Kong's Hang Seng has only edged 0.10% higher. Yesterday we saw similar gains by mainland indexes, only for rallies to evaporate later in the day. I suspect, like yesterday, there is a little "national team" help around today. Nothing has materially changed with China's situation and the rallies today should be treated with caution.

Elsewhere, it is a sea of red in Asia with a split once again, between the more Nasdaq-correlated North Asia heavyweights, and the more value-orientated markets of ASEAN. Japan's Nikkei 225 has slumped by 1.45%, with South Korea's Kospi tumbling by 1.15%, and Taipei retreating by 1.70%. Singapore is down just 0.10%, with Kuala Lumpur 0.30% lower, and Jakarta easing by 0.60%. Manila has fallen heavily by 1.75%, and Bangkok is just 0.05% lower.

Australian markets are also lower today, but not as badly as I feared after much higher than expected inflation data. Australia's heavy resource base makes it a potential winner the more aggressive  becomes in the international energy and resource market. That seems to be limiting the losses in the lucky country which usually has a high US correlation. The ASX 200 is down 0.72%, while the All Ordinaries have fallen by 0.70%.

Nothing about 's move to ban natural gas exports to Poland and Bulgaria today can be construed as bullish for European equities. Nor can the threat of widening n retaliation in this space be either. As such, I expect European markets to open sharply lower today and stay that way, regardless of developments elsewhere.

US markets will be dictated by whether the FOMO gnomes of Wall Street are in bargain-hunting mode, or not. Meta's quarterly results are likely to have the final say on whether the overnight meltdown pauses for breath or doesn't pass go on its way directly to jail.