Markets in Asia have opened this morning on an upbeat note, tracking overnight gains on Wall Street. All major indices in the region – from Japan to Australia to Seoul to Hong Kong – are looking good and green.
That came after Wall Street posted the third straight day of gains. Although there was nothing in the economic indicators to warrant a reversal of sentiments, markets are evidently looking forward to Friday’s meeting of the US Fed – for signs of monetary easing.
Curiously, Europe, which was the trigger for last week’s downward spiral in the markets, appears to have gone off investors’ minds for the moment. But since the fundamental problems remain unaddressed, that momentary amnesia might be reversed very soon.
The one other striking development overnight was the sharp fall in gold prices. Some of it was driven by the raising of margins for gold futures by the Shanghai Gold Exchange for the second time this month to cover the risk of a default. Given the recent parabolic rise in gold prices, investors may also have used the new highs to book some profits.
It’s hard to say if the positive cues from Asian equity markets this morning will feed into the Indian market when they open today. The mood after yesterday’s fall is distinctly downbeat, and although analysts have been talking up the “buying opportunity” that this market represents, it appears that few investors are willing to bet against the trend.
It doesn’t help that the political mood in India is a bit vitiated by developments in Delhi, where the standoff between the government and representatives of Team Anna appears to have deteriorated overnight.