Stocks across Asia were mixed on Tuesday as investors grappled with Wall Street’s lowest level of volatility since before the financial crisis amid a holiday-interrupted week.
Japan’s Topix was up 0.6 per cent, while Australia’s S&P/ASX 200 was down 0.5 per cent owing to a bad day for the banks. ANZ Banking Group was down 2.7 per cent, retreating from a record high after the lender reported a half-year profit that missed analysts’ expectations.
After returning from a long weekend, Hong Kong’s Hang Seng was up 0.4 per cent and China’s Shanghai Composite was fractionally lower. Singapore’s Straits Times index, also returning from a holiday, was up 0.9 per cent with a strong showing from DBS, which reported an increase in net profit during the March quarter.
The Chicago Board Options Exchange implied volatility index – Wall Street’s preferred fear gauge – slid on Monday to its lowest close since mid-February 2007. The Vix finished at 10.11, and at one point traded below the 10-point mark for the second time this year.
The low level of volatility helped push the Nasdaq Composite to its sixth record high close in a row, and the S&P 500 up by 0.2 per cent, leaving it one-third of one percentage point from its March peak.
The Vix has quickly returned to subdued, near-record low levels relatively quickly following numerous geopolitical events over the past year – such as the Brexit vote, the US election and France’s presidential vote – that analysts expected to unnerve markets.
On Monday, UK, German and French markets were closed for public holidays.