Asia market morning update - Brexit deal, or no deal?

We are again returned to the point where some are viewing the cup as half full and the others half empty, making for that mixed but muted open for Asia markets. The smorgasbord of Brexit politics, nevertheless, continues.

Source: Bloomberg

Brexit impasse

The outcome of Tuesday’s vote had perhaps not been too much of a surprise, particularly following Britain’s attorney general’s ‘unchanged’ view towards the legal risks ahead of the vote. With this outcome, we are led towards the route of a likely extension to the March 29 deadline, or better known as having the can kicked down the road. That said, the issue remains a complex one and the multitude of possibilities continue to reside on the table. This includes the latest surprise mention by Prime Minister Theresa May of a second referendum, perhaps the only option offering some slight glimmer of hope amid the other likelihood that could see the UK eventually crashing out of the eurozone. It will be moving mountains to get another deal done even with a prospective extension past end-June after Prime Minister Theresa May’s lengthy efforts got voted down on Tuesday.

Between the abovementioned two scenarios, we have once again seen GBP/USD returning to mull the 1.30 level, the midpoint between the two extremes, and erasing the gains on Tuesday from hopes of passing the deal. As for the EUR/GBP pair, we have yet to see the confirmation of the break below support for further continuation of the downtrend. Watch the small risk of a ‘no deal’ outcome in Wednesday’s vote that would be catastrophic to the pound while the eurozone’s January industrial production will also be one to note this Wednesday.

EUR/GBP Mini

Wall Street’s Boeing problem

The S&P 500 index had managed to cling on to a second session of gains on Tuesday, though the Dow had evidently given in to its Boeing problem. The outpouring of airlines grounding their Boeing 787 Max 8 jets on Tuesday increases the pressure on Boeing Co. with prices falling back to the earlier resistance-turned-support at $377.54. It is hard to say where things will go with the investigation still on-going, but looking at prices, one should not be surprised if we find the earlier rangebound trade returning until further conclusions can be made. Any dip past the earlier support at around $291, however, could set prices on course for further downsides.

Boeing Co (All Sessions)

Asia markets

As Wall Street tread mixed, Asia markets are likewise expected to take a breather into the midweek session ahead of China’s data dump on Thursday. Energy stocks may be faring relatively better following the latest pledge by Saudi Arabia for deeper cuts and a surprise drawdown in the private API crude inventory report in the US. Brent Crude prices seen supported at around $66.82 when last checked. Expect the idle to continue in Asia while keeping an eye on the Brexit issue up ahead.

Yesterday: S&P 500 +0.30%; DJIA -0.38%; DAX -0.17%; FTSE +0.29%


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