Asia market morning update

Amid the lack of fresh regional leads, Asia markets are expected to remain attuned towards drivers flowing eastwards, edging higher this morning following the record close on Wall Street.

Source: Bloomberg

Earnings driven record close

A fresh wave of earnings optimism saw to the S&P 500 and NASDAQ clocking a record close while the Dow likewise gained in the Tuesday session. Once again, this is set against the backdrop of the array of factors including stabilizing data indicators, improving sentiment over geopolitical matters and a supportive Fed that had pushed up prices since the start of the year. With the upswing, the S&P 500 index had notably headed into overbought territory, one to watch, though this had also been backed by better volume.

US 500 Cash ($10)

Caterpillar in focus

The internals had been highlighted in our note yesterday, featuring the short-term risk of a retracement with the lack of breadth in this latest rally. That said, it is likely something to keep in mind past this week as investors remain attuned towards the long list of tech earnings among others. Scrutinizing the slew of releases from the overnight session, it had arguably been a mixed bag as Twitter and Lockheed Martin built confidence while on the other hand, we had the likes of Harley-Davidson fall prey to the tariffs war as shown in their first quarter report. It would be too early to call it all rosy on the earnings season and the likes of Caterpillar, an economic bellwether for the global economy, would be the one to watch in the upcoming session. As far as the market goes, prices had dipped slightly at the start of the week in anticipation while technical suggests an ascending triangle pattern awaiting breakout for Caterpillar. The impact could ripple across with any surprises.

Caterpillar Inc

King dollar

Meanwhile on FX, the US dollar index saw a strong bid overnight towards resistance once again, counting the new home sales surprise one to boost the strength. This had also been on the back of the weakness across EUR and GBP with the disappointment noted in April’s EU consumer confidence reading. The risk remains towards the upside for the greenback particularly with the German Ifo and US Q1 GDP this week that could see the dynamics favouring the US dollar.

US Dollar Basket

Asia open

Trailing the record run on Wall Street, Asia markets look set to rally ahead into the Wednesday session. Barring the Australia CPI data, it is a relatively quiet day for the Asia Pacific session. The attention, as it is, remains west towards the slew of earnings including Caterpillar as told above for any surprises that could reinvigorate the flatlining trade for most Asia markets.

Yesterday: S&P 500 +0.88%; DJIA +0.55%; DAX +0.11%; FTSE +0.85%


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