Awaiting the Fed testimony
After adjusting for the overpricing in of rate cuts, the picking up of tech stocks overnight on Wall Street presents a positive lead for Asia markets, though risks persist with the Fed testimony ahead.
Holding pattern
A late surge for Wall Street was seen in the Tuesday session as markets continued to adjust ahead of the key testimony by Fed chair Jerome Powell. As told, the upcoming testimonies on Wednesday and Thursday play a huge part into guiding the market’s expectations just prior to the July Federal Open Market Committee (FOMC). After the latest US jobs report undid some of the market’s dovish expectations for the Fed, the risks of Fed Powell presenting a less as dovish tone remain one that could see to markets re-positioning this week. Fed Powell’s testimony will be scrutinized for both his views on the economic situation and guidance in terms of any upcoming moves. For prices, despite the uptick, the broad consolidation tone remains as seen in the chart below for the S&P 500 index. Immediate support comes in at around 2950.
Separately, reports that US and China had reconnected by phone had contributed in part to the uptick in equities. Talks had been noted to be ‘constructive’ by White House economic advisor Larry Kudlow though both the fact that no details had been confirmed and the uncertainty in how talks will recontinue present a mixed picture that should continue warranting a defensive positioning in markets. Haven assets such as USD/JPY (大口） and gold prices were seen reacting little to this, marking minimal impact from lack of fresh developments on the trade matter. Focus ahead to the Fed testimonies as the key events this week ahead of the US CPI data.
Source: IG Charts
Asia open
The lift in tech stocks and the moderate optimism from the US-China contact nevertheless present a relatively benign picture for Asia markets going into the Wednesday session. As said, the focus lies ahead with Fed Powell’s testimony after the Fed chair provided little in his speech on banks’ stress test on Tuesday. China’s PPI and CPI will be due in the day, with the factory inflation one to decline to reflect the slowdown in the economy. Watch for any disappointment that could weigh on Asia markets ahead of the Fed updates.
Yesterday: S&P 500 +0.12%; DJIA -0.08%; DAX -0.85%; FTSE -0.17%
This information has been prepared by IG, a trading name of IG Australia Pty Ltd. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
Take a position on indices
Deal on the world’s major stock indices today.
- Trade the lowest Wall Street spreads on the market
- 1-point spread on the FTSE 100 and Germany 40
- The only provider to offer 24-hour pricing
Live prices on most popular markets
- Forex
- Shares
- Indices
