Asian markets down on “risk off” sentiment, Europe awaits PMI

Markets are partly correcting the strong momentum seen last week as political jitters in Spain and Italy concern investors about Eurozone “health”. Japan's Nikkei Stock Average (-1.90%), South Korea's Kospi (-0.77%), and Hong Kong's Hang Seng (-1.96%) fell today, while China's Shanghai Composite (+0.23%) was one of the few indexes rising.

Australia's S&P/ASX 200 fell -0.51% after the widely expected unchanged policy decision from the RBA, with cash rates at 3%. “Clearly the RBA is prepared to cut, but jumping at each data surprise may prove to be exhausting and we suspect that Thursday’s employment report will garner way too much attention. At the time of writing, the market is pricing in ~50% chance of a rate cut next month. (We stick to our June timing)”, wrote TD Securities analysts.

Futures for the German DAX 30 (-0.05%) and the French CAC 40 (-0.03%) are signaling a slightly lower opening ahead of Markit PMI Services data. “The strong improvement in Eurozone Services PMIs should be confirmed in the second reading, with any upgrade to the French data a positive for the market, which was the laggard due to the fiscal tightening at end-2012”, said TD Securities analysts, also pointing to chances of disappointment on Eurozone December Retail Sales on the back of tightening in France and Spain.