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Asia morning update

A mixed but muted start to the day is expected as we watch the unfolding of various events into the Tuesday session including Fed Powell’s testimony to the Senate.

Wall Street rallied upon the tariffs deadline extension tweet from President Donald Trump as expected, though finding the enthusiasm diminishing into the end of the session with the lack of further details. Whether we would find a deal coming through remains in question as apparent from President Donald Trump’s latest suggestion of a ‘signing summit’ before defecting to the probability that the deal ‘might not happen at all’. As it is, we continue to view the trade matter through an opaque screen and make assumptions from the shadows of President Donald Trump.

The above said, sentiment had certainly improved as seen with the selling of primarily defensive sectors in Monday’s session. From a technical perspective as well, the 2800 level on the likes of the S&P 500 index remains a strong one to beat and may have been a key cause of capping further upside after test in the session. The session ahead watches the likes of the Fed Jerome Powell’s testimony to the Senate banking committee, due to keep the dovish tone intact and could remain a support for markets. Over and above this, however, it would be of keen interest for the market to follow the developments of data releases such US February consumer confidence reading into the Tuesday session. After falling through November 2018 to January this year, the worry is that the jitters surrounding the trade tiff continue to weigh. One for the FX market as well, seeing the greenback in consolidation.

Notably, crude prices took a beating overnight, once again with President Donald Trump’s words to blame though any lingering impact remains to be seen. The President’s tweet on ‘oil prices getting too high’ tails the latest 3-month high print for WTI futures. It may however be difficult for the President to balance the conflicting pressure for prices with his positive rhetoric surrounding the US-China trade matter acting as the wind beneath the wings for commodity prices such as crude. With the thumping from the words, prices had traded slightly lower for Oil - Brent Crude to the $65 levels but finding the support ahead of the 20-day moving average and the next support at $63.75. Look to oscillation within this level, though one should not be surprised that the $70 again comes into question against the backdrop of OPEC curb and any deal signing between US and China. For the day ahead, however, Asia energy stocks would be bracing for impact.

With the above said, Asia markets are set to idle awaiting fresh leads. Barring energy stocks, expect the rest of the region to await leads in the form of the Fed testimony in a session where data is sparse. Singapore’s January industrial production and Hong Kong trade numbers are the few lined up for today. Local STI could see the painfully still consolidation carrying on.

Yesterday: S&P 500 +0.23%; DJIA +0.12%; DAX +0.42%; FTSE +0.07%


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