Asia morning update - watching trade
Asia markets are expected to tread water as US-China talks continue in Beijing in what could be a decisive round for trade relations. Meanwhile, the focus goes to releases including China’s trade numbers for the Asia region.
The momentum sustained on Wall Street with gains seen once again supported by the positive sentiment still swivelling that of a government shutdown aversion and the trade hopes. The Dow and the S&P 500 Index both keeping to a moderate green at 0.30% and 0.46% respectively. Gains had notably been led by the energy sector on the S&P 500 as crude prices edged higher despite the 3.6 million build up in crude inventories according to the US department of energy. The affirmation from Saudi Arabia’s energy minister circling the fact that the country continues to reduce output by more than the agreed amount with OPEC and co. and trade hopes appear to be keeping the crude market going. Brent was last seen trading above $63.70 after printing a near 3-month high. Watch for corresponding gains into the Asia session.
It had helped as well with the lack of inflation pressure seen in developed markets overnight keeping central banks, particularly the Federal Reserve, at bay. US January’s core CPI arrived at a steady 0.2% month-on-month, in line with expectations. Year-on-year numbers seen firm at 2.2% with the drag from oil prices keeping a lid on inflation figures, an expectation shared by the market and central bankers alike. This reading may well allow the Fed to retain their current wait-and-see attitude with regards to monetary policy. Across the Atlantic, UK inflation likewise kept tamed with disappointments printed.
One would note that the greenback strength had however been renewed overnight as prices charged back above 97.0 on the US dollar index. An array of factors including the government shutdown aversion and disappointment in December’s eurozone inflation appear to be behind this wave. EUR/USD correspondingly experiencing the slump, taking prices below the $1.13 handle with further downside risks as we await the preliminary reading of the eurozone Q4 GDP. It does appear that the bears are fully charged to take prices far lower from here, so do watch for the trigger in the session today.
For Asia markets, the exhaustion of the positive sentiment that powered US markets overnight looks to invite the region to tread water in the session. Certainly, there had been words of affirmation from President Donald Trump on talks with China going ‘very well’ but the wait is on for the conclusion from the talks this week that could be more telling on where the two countries will take things next. Watch for China’s trade data in the mean time for whether a renewal of trade concerns may be the case. As far as regional markets have suggested, there is a sense of cautiousness ahead of the release where exports are due to retain its year-on-year decline.
Yesterday: S&P 500 +0.30%; DJIA +0.46%; DAX +0.37%; FTSE +0.81%
This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.
Take a position on indices
Deal on the world’s major stock indices today.
- Trade the lowest Wall Street spreads on the market
- 1-point spread on the FTSE 100 and Germany 30
- The only provider to offer 24-hour pricing
Live prices on most popular markets