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Asia morning update: Mixed leads for Asian markets

Recovery in US markets remain underway while the latest development in Manchester threatens to derail the positive lead for markets in the Asia Pacific region.

Source: Bloomberg

Overnight gains in US markets appear to transcend resilience, but exhibits the underlying confidence that remains in the market. Investors have so far bought back stocks and US indices retraced a good proportion of the losses clocked since last Wednesday’s Trump slump. A breakdown of the S&P 500 index by sectors finds gains led by IT, utilities and industrial sectors. Notably, deals from President Donald Trump’s trip have triggered interests in defence stocks, undoing some of the pressure from the political concerns surrounding him. As the President continues his visit, the official budget request from the new administration is slated for release. Early reports suggest that massive spending cuts are due while expansion of funding for the defence sector may keep the sector rallying in US markets today.

Asian markets are expected to find mixed pressure at the start of Tuesday. While positive leads remain from US markets and rising crude oil prices, the latest explosion in Manchester appears to have ignited some risk-off sentiment. Safe havens including gold and JPY have each notched mild gains after news broke out of the blast, the former eyeing last Thursday’s 2-week high of $1265.08. Our opening calls for Hong Kong and Singapore market points to near neutral returns and moderate gains respectively for Tuesday.

Notably, the local Singapore market had been under significant pressure on Monday, deviating from the trend of broad gains amongst Asian markets. The steep slide in property shares on Monday had arguably came from one of the better performing sectors year-to-date on the STI. Rising crude prices meanwhile may be the primary support for prices into today’s session, with optimism held ahead of the OPEC meeting on Thursday.

Tuesday’s market will be expecting Japan’s March all industry index, Taiwan’s industrial production and inflation numbers from Hong Kong and Singapore. The final figures for Germany’s Q1 GDP will also be released, though the market’s attention will likely be captured by the slew of Markit May PMI data for the Eurozone and US.

Yesterday: S&P 500 +0.52%; DJIA +0.43%; DAX -0.15%; FTSE +0.34%

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