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Asia Morning Update

Today marks the final opportunity for markets to position for the Federal Open Market Committee (FOMC) meeting conclusions and the side-lines may be where markets continue to remain.

Oil Barrel
Source: Bloomberg

US markets were seen trading lower on Tuesday amid low volumes, a trend found across global markets. Underpinning the pullback for markets overnight had been the sharp decline in oil prices which had set energy stocks on a weak footing shortly after the open.

An over 1.0% drag on the comprehensive S&P 500 index was exerted by the energy sector and the index itself had closed 0.34% lower. The S&P 500 index itself had nevertheless remained safely in the sideway channel, holding in anticipation of the FOMC meeting decision.

Taking crude oil prices on a roller coaster ride had been the announcement by the Saudis, reporting a daily output of 10 million barrels for February. This had immediately sent WTI futures down 3.0% to a fresh recent low of $47.09 per barrel (bbl). Prices had been quick to bounce back this morning after the private American Petroleum Institute (API) report showed that US crude had fallen 531k barrels in the previous week.

This went against the expectation of a sustained build up in crude inventories and downplays one of the recent concern for oil prices. The reversal nevertheless sets on weak footing with the multitude of concerns including OPEC compliance and US output still at the forefront for traders. 

Asian markets which had remained largely resilient in the face of the Wall Street weakness may find the weak leads as considerable headwinds for trade in the day. Our opening calls for Asian markets finds moderate pressure for the likes of the HSI and local Singapore market. Early movers in the region including the Nikkei were found in red, despite positive triggers from USD/JPY movements. This could leave Asian investors with little to take comfort in and for the local STI, the 3150 resistance could remain a firm cap for prices today.

China’s National People’s Congress will conclude today with a press conference by Premier Li Keqiang a point of interest for markets. Meanwhile all eyes are on the Fed FOMC meeting decision due 2.00am Singapore time tomorrow, an event that could keep bets on the side-lines in the meantime. For the day ahead, the final figures of Japan’s January industrial production and Indonesia’s February trade figures will also be due.

Yesterday: S&P 500 -0.34%; DJIA -0.21%; DAX -0.01%; FTSE -0.13%

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