A large part of the focus falls squarely upon President Donald Trump’s visit to South Korea, ahead of his China trip, with North Korea a lingering concern.
The clear themes from last week continue to play out on Monday in the US market. On one hand we have energy stocks soaring ahead from the crude rally, on the other hand, the failed merger between Sprint and T-Mobile gave rise to the S&P 500 index’s smallest sector’s steep decline of 2.5%. The net movement however still finds the S&P 500 index clocking another record close and the CBOE volatility index, the VIX, loitering just above the 9.0% space. Earnings meanwhile remained broadly positive, including ones from the consumer discretionary sector as Michael Kors Holdings Ltd. which led gains on Monday.
Notably, the meteoric rise for crude prices has certainly caught the imagination of investors. Reduced rig counts in the US, improved OPEC compliance and also broad political disturbances in Saudi Arabia that unfolded over the weekend had all been favourable conditions to motivate oil bulls. The greatest draw may remain with the upcoming November 30 OPEC meeting with OPEC and non-OPEC participants fanning expectations for an extension to the output curb through end 2018. WTI futures’ latest surge brings it over $57.00 per barrel (bbl) and Brent up to $64/bbl, both clocking 1-month returns of above 16.0%, certainly raising the risk of markets selling the news with the current overbought conditions.
On a side note, the broad political disturbance set within Saudi Arabia certainly appears to have raised risk sentiment, sending gold prices climbing. The attention tunes slightly to Asia with President Donald Trump’s close proximity to North Korea this Tuesday. Unlike the meeting with Japan, the difference in stance towards North Korea between President Donald Trump and his South Korean counterpart may be put to test in today’s session. Gold prices were last seen finding support at around $1280 levels, awaiting leads.
Mixed performances have become a familiar sight for Asian bourses with the lack of strong catalysts, though the positive lead seen in soaring energy stocks may continue to inspire the Asian region this morning. We have certainly seen the commodity heavy ASX200 powering ahead this morning with 0.75% gains when last checked. For the local STI, look for a mild recovery after being weighed by DBS Group’s earnings disappointment yesterday.
Watch for Australia’s RBA meeting today while waiting in the data docket includes a slew of foreign reserves data, China’s being a highly watched on ahead of President Trump and President Xi’s congregation.
Yesterday: S&P 500 +0.13%; DJIA +0.04%; DAX -0.07%; FTSE +0.03%