Chart of the day: Asian equities remain prey to pessimism
Asian stock markets remain prey to deep pessimism despite a recent bounce for the MSCI Asia ex-Japan benchmark index that has seen it recover from its previously oversold position. Exclusive sentiment barometer indicators from Absolute Strategy Research (ASR) reveal the fragility of the bounce and the lack of support from underlying fundamentals. The negative impact of downward revisions to the region's growth outlook, with nine out of 10 markets seeing cuts to gross domestic product growth forecasts for this year, is an overarching concern. It also chimes with the extreme pessimism that ASR indicators are also flagging up on metals such as copper, which are likely reflective of the US dollar's strength and growth concerns. If such concerns persist, the risks are that the recovery in oversold Asian equity markets proves short-lived.
David McBain is a technical strategist at Absolute Strategy Research