Asia morning update

A mixed muted start for Asia markets is expected following US earnings support, though sentiment within markets continue to jostle with the slew of uncertainties.

Source: Bloomberg

Defensives gains

Wall Street closed higher on Wednesday following a series of well-received earnings releases, though it had been the defensives that were seen charging ahead. The string of releases including the likes of IBM and United Technologies both saw better-than-expected guidance for 2019 which helped to propel gains for their share prices and their respective sectors. On the comprehensive S&P 500 index, the IT and industrials sectors rose 0.41% and 0.18% respectively in Wednesday’s session. That being said, it had been the defensives at the forefront with consumer staples and utilities sector both up more than 1.0%, reflecting the cautions stance that the market continues to hold.

As it is, the indecision shown through prices remain apparent within markets. With the moderate gain for both the Dow and the S&P 500 index overnight, prices continued to bobble around the 50% Fibonacci retracement level. The bulls and bears still fighting this out as the CBOE volatility index oscillate around the 20.0 mark.

US 500 Cash ($10)

Perception changes towards earnings

It is worth noting, however, that the reception towards the latest slew of earnings have reversed from previous quarters whereby positive earnings had been seen as a relief after having markets plagued by the bout of overtly bearish sentiment into end-2018. This is a stark contrast to the spate of Q3 releases which had been viewed as the end of its times despite the spectacular growth performance. This change in market perception could go a long way should we find similar scenario playing out next week with FANGS stock such as Facebook and Amazon’s releases, one to watch. Evidently this will sit between the slew of events as mentioned in the day prior including the US-China and Fed meeting, that could all play into the market moves.

Asia open

Once again, the lack of strong leads overnight amounted to a muted start for the Asia session as mixed performance marked the start of the session. A small beat of Australia’s December employment figure at 21.6K against the 16.5K consensus had seen the ASX 200 up slightly. Comparatively, as USD/JPY edged lower compared to yesterday, we had seen the Nikkei 225 opening in red. Some attempt at retracing the losses had been seen, though with the preliminary Nikkei manufacturing PMI for January out at the 50.0 mark, there could lack impetus for further upsides.

There would perhaps be more to watch on the FX end with the slew of events up ahead. While the Bank of Korea had kept rates unchanged, a stance likely taken by the Bank Negara Malaysia today as well, there will be the ECB meeting, a Senate vote in the US among others. ECB president Mario Draghi’s press conference will be watched for the dovish tone adopted while the Senate vote for the greenback as worries mount on the government shutdown for growth.

Yesterday: S&P 500 +0.22%; DJIA +0.70%; DAX -0.17%; FTSE -0.85%


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