Asia market morning update - Asia markets rally on
A holiday-thinned start to the week is expected, though the region is due to continue being enthused by the slew of factors supporting markets.
Thinned market trade
The Easter holiday keeps most markets closed on Monday, including the likes of Australia and Hong Kong, making for thin market trade. This is alongside the break that sustains for most European economies, though the US will notably re-open on Monday. Amid the light data day, markets will likely find little fresh leads to drive trade with only US existing home sales amongst which to watch, in addition to a couple of corporate earnings. Look to the Asia region to ease slowly into the busy week of earnings.
All the above said, one would no doubt notice the rally that had continued across global equity markets last week counting positive earnings, receding near-term political worries and pockets of data surprises as factors push prices higher. A busy week for US earnings lies ahead with approximately 30% of the companies on the S&P 500 index due to report including the likes of Facebook, Microsoft and Amazon that could really effect a change for markets. The broad expectation is for US indices to grind higher given the low expectations for Q1 that sets an easy hurdle. However, with prices nearing all-time highs, some sense of caution may bound to set in. Earnings and the first reading of US’ Q1 GDP at the end of the week would be key for markets this week. This is while the string of central bank is due to remain broadly supportive.
US Dollar Index: The rangebound trade for the US dollar index, weighed against the six major currencies, continues amid the lack of impetus within markets. While we do have the likes of EUR downsides, particularly following the weak flash PMIs, one to aid prices higher, expected pullback in USD/JPY which may lock the US dollar index for the time being despite the uptrend. Look to the likes of US Q1 GDP amongst the key releases this week for trade.
USD/JPY: The improvement in risk sentiment had been one to aid prices higher in the previous week, though seeing the resistance now capping further upsides. Positive Chinese Q1 GDP figures alongside the diminishing near term political risks as noted above had altogether weakened the yen strength over the course of last week. That said, with the golden week holiday coming up, the risks to the downside as potential profit taking may set in place, one to watch.
S&P 500: It is an earnings game for the S&P 500 index this week with approximately 30% of the companies due to report and FANGs name such as Facebook and Amazon amongst which. Look to whether caution may set in ahead of these key earnings though the bias remains on the upside with the releases.
Last session: S&P 500 +0.15%; DJIA +0.42%; DAX +0.57%; FTSE -0.15%
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