Wall Street record high inspires Asia markets

A strong start for Wall Street sets the positive tone for Asia markets going into Friday, watching tech stocks in the region after the gains seen for the sector in the overnight session.

The slew of positive news outlined yesterday including China’s policy support and the expectation for a phase-one trade deal signing on January 15 underpinned the rally for Wall Street. Both the Dow and the S&P 500 index can be seen gushing along to print fresh all-time highs on the first day of trading in 2020. Notably, the abovementioned support for markets from both monetary policy and receding trade tensions, both items that had concerned markets in 2019, had invigorated the risk-on appetite from investors. A breakdown of the comprehensive S&P 500 index’s performance by sectors finds industrials and IT leading with gains of 1.81% and 1.73% respectively. Conversely, defensives including utilities and real estate had both lost grounds by more than 1.30% on Thursday.

Looking at the likes of the US Fang index following the broad tech rally and noticeably Apple’s first break of the $300 mark, prices can be seen likewise breaking out on the upside. That said, the breach of the overbought territory can be seen reoccurring that could instil some sense of caution going forward, even if a positive January remains the expectation with the moving along of the US-China trade deal and Q4 earnings season in tow. Watch for a pullback to support ahead of any further upsides. Immediate support on the IG Fang index comes along at 3175.1 ahead of 3089.9.

USD weakness trend

On FX, the weak US dollar trend had also been one established since prices gave up on the uptrend from Q4 2019 as seen in the US dollar index. Amid the uncertainty as to how far US equity prices at record highs could go while treasuries tread water, this may be one trend that one can expect to continue with greater conviction. This comes on the back of the easing in trade tensions, while the next political driver in the form of US elections is expected to bring along with its significant amount of noise that could afflict the greenback strength. Watch the next leg lower here for the USD index, eyeing the 96.00 handle next.

Yesterday: S&P 500 +0.84%; DJIA +1.16%; DAX +1.03%; FTSE +0.82%


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