CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Please ensure you fully understand the risks involved. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Please ensure you fully understand the risks involved.

Trump the focus

Markets are likely to focus on President Donald Trump’s upcoming address of the Congress at the start of the week before macroeconomic data takes over for the second half. 

US Flag
Source: Bloomberg

A month following the Presidential inauguration, President Donald Trump’s comments continue surprise the markets. For Asia, the latest set of comments, describing China as the ‘champion of currency manipulation’ does draw some attention on what to expect next.  

US markets were seen turning topsy-turvy on Friday before clocking gains into the market’s close with gains led by the utilities and telecoms sectors, a notable defensive play. Headlines in the early part of Friday were hinting at an end to the Trump-led rally though we certainly have not seen a reversal yet.

While the relative strength index (RSI) alone does not paint the full picture, the extended duration in which we have found the comprehensive S&P 500 in overbought territory does serve as a warning sign. The upcoming address by President Donald Trump to the Congress will have its opportunity to either build or undermine the current market optimism. As House speaker Paul Ryan remarked, the address will be ‘an opportunity for the people and their representatives to hear directly from our new president about his vision and our shared agenda’, and that certainly builds anticipation for an impactful address by this pro-growth administration.

The end of the week once again brings the Baker Hughes oil rig count report which the market has been following religiously lately. In line with the uptick in crude oil supply, US oil rig count continue to rise for the sixth consecutive week, sending crude oil prices paring gains on Friday. WTI futures departed further from Thursday’s high, sinking back to $54.00 per barrel when last checked at 8:00am (Singapore time). Conversely, Commodity Futures Trading Commission’s Commitments of Traders report from the previous week showed net long positions remain on the rise, highlighting the bullishness of the market built on the back of OPEC commitment.

Asian markets generally pulled back on Friday but the day ahead brings with it mixed leads. The ASX 200 remain in a state of decline, weighed by both the key financials and materials sectors. Likewise, our morning calls for the Nikkei 225 sees it continue being pressured, though the step up in USD/JPY to $112.20 level could help to support the index. HSI and STI meanwhile are slated to see a relatively flat open on Monday. 

Look towards an update on the January trade conditions for Thailand and Hong Kong today. Federal Reserve Bank of Dallas President Robert Kaplan will also be speaking during US hours while January pending home sales and Feb conference board economic confidence data will be reported.

Friday: S&P 500 +0.15%; DJIA +0.05%; DAX -1.20%; FTSE -0.38%

This information has been prepared by IG, a trading name of IG Markets Limited. 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.

Find articles by writer