Calm end to the week

This is a relatively calm end to the week considering Monday was a day investors panicked over Russia and Ukraine tensions. 

The sell-off at the start of the week has been erased and stocks staged a comeback in both the developed and developing markets. 

The consecutive weak job growth data from the US would have ordinarily caused a debate, amongst market participants, on whether the Fed will continue to reduce its asset program.

This time, it has been broadly accepted that tapering will go ahead and any bad data is a blip because of the severe weather. The Fed Beige book’s overuse of the word weather has somewhat validated the weather excuse in past data.  

While risky assets in Asian markets play catch-up with US counterparts, the foreign fund inflows show a marked decline in appetite for this region. However, the five-day performance would show that Asian indices are faring on average better than the US, except for the Hang Seng and Kospi indices.  

A comparison between the one-month and three-months performance would show the S&P 500  and Nasdaq outperforming most Asian indices, except for the Philippines. The Jakarta composite had a stellar performance in the past three-months with a 12% return.

Asian stocks will have another positive trade during the open. Although there are uncertainties still brewing, like the geopolitical crisis and patchy US economic data, investors have decided to move on from these issues and focus on corporate earnings. 494 out of 499 companies have reported Q4 so far and close to 5% have reported earnings surprise.

The positive trend in earnings is in focus, although it is clear consumer spending remains weak. Staples is the latest retailer to announce that they are closing down 225 stores in North America as they forecast sales to drop.

The main events investors are watching out for tonight are the changes in NFP, unemployment rate and trade balance.

The information 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 Bank S.A. 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 and as such is considered to be a marketing communication.