Asia market morning update - thin markets trade in Asia
The lack of a US-China deal announcement dealt little blow to sentiment overnight with the attention shifting towards growth with US labour market updates into Friday and amid thin market trade at the end of the week.
‘Monumental’ deal
Despite the anticipation for a deal announcement, President Donald Trump’s latest update that no deal will be made this week did little to dent sentiment with his eagerness to see it happen clearly shining through. Speaking of the ‘very monumental’ deal, a timeline of four to six weeks may be the earliest that it would be established altogether pointing to sustained uncertainty moving forward. Still, prices from USD/JPY (大口） to US indices had reflected little disappointment with this outcome coming within expectations.
Trade talks continue into Friday as the next steps remain unknown at this point. Look to the shifting of attention towards growth as the non-farm payrolls update unveils on Friday. While upsides may be limited with surprises here, a significant uptick from the 20K will be needed to reassure investors that we are not headed in the direction of a labour market contraction to keep markets afloat.
Bullish oil market
On commodities, the bullish momentum for crude oil had been apparent despite the slight dip this week on the unexpected US inventory build. Brent and US crude’s acceleration in upward momentum on the back of tight supply saw to the former topping $62 per barrel (bbl) and the latter trading briefly above $70/bbl. As with equity markets, the uptrend had also been underpinned to a large extend by the receding growth worries and the trade hopes this week, trailing the set of better than expected PMI numbers out of US and China. This may be a sweet spot for prices to keep going at present seeing that the levels corresponding to November 2018 levels and not at a point to invite inflation worries that could affect growth down the road.
Look to the continued upward momentum into the end of the week with the latest lauding of trade talks progress from President Xi Jinping and the US rig count report into Friday for leads.
Asia open
As told above, President Xi Jinping had commented via Xinhua this morning lauding progress in trade talks and calling for early conclusion of negotiations, echoing President Donald Trump in channelling positivity for markets. USD/JPY jostled higher on the update, last seen at 111.75. Early movers including the ASX 200, however, saw little reaction towards the news. This will likely keep the rest of the Asia region supported in the thin market trade today with China and Hong Kong joining Taiwan on market holiday. Once again, watch for any signs of caution towards the end of the session with the US NFP release coming in after Asia hours.
Yesterday: S&P 500 +0.64%; DJIA +0.21%; DAX +0.28%; FTSE -0.22%
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