After a roaring start to the year, things are starting slowing down
Asian shares were a little jittery in yesterday's trading - as central banks added a dose of volatility into markets and we saw the VIX rose above 10 yesterday.
That started feeding over into European equities and in the end we saw the S&P 500 and Nasdaq break six consecutive days of gains to start the year.
While volatility is still relatively low in relation to previous times, any hints of uncertainty can turn markets on its head when the expectations are so low now.
Central banks have started the year banging, with Bank of Korea intervening in the market to keep the KRW down. Then, we had the Bank of Japan announcing "tapering" of its bond purchases. After that, we had the PBOC come in to say that they are suspending the "counter-cyclical factor" in its daily CNY fixing mechanism.
The latter move by the PBOC saw the CNY fall - and that added some form of nervousness into Asian markets as emerging market currencies fell on the back of that as well. In turn, that nervousness feeds into the equity market too.
While stocks are due for a slight correction following a hot start to 2018, it is a reminder that small doses of volatility is all it takes to get markets scared when prices are at record levels.
Here are how Asian equities are performing today:
- Nikkei -0.76%
- Hang Seng -0.10%
- Shanghai Composite -0.20%
- CSI 300 -0.36%
- Kospi -0.34%
- ASX 200 -0.48%
