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Asia morning update

US markets staged an impressive rebound overnight and we are expecting this infectious optimism to help Asian markets up another leg midweek.

Federal Reserve
Source: Bloomberg

Shaking off the recent gloom surrounding policies, US markets allowed a better-than-expected set of data to lead prices higher overnight. Against the expectations, US March conference board consumer continued to improve and touched the highest level since 2000 at 125.6. Adding to the optimism had been February’s wholesale inventories data which ticked up 0.4% month-on-month (MoM), beating the market expectation of a smaller 0.2% MoM gain.

Dovish talks by Federal Reserve members had done little to dampen this raging confidence in the markets. Other than the outright indication by Federal Reserve vice president Stanley Fischer that two interest rate hikes appear appropriate, Federal Reserve chair Janet Yellen also made an appearance overnight. The Fed chair once again skirted mentions of monetary policy but touched on issues relating to unemployment, highlighting that as an area of concern. The wider market had taken these Fed talks in its stride and avoided trading on it.

Fed Governor Jerome Powell’s comments had been a poignant example in reflecting the fact that alongside the market, the Fed is still unclear with regards to President Donald Trump’s policies and this could remain hurdles for a clear policy path.

US markets picked off from where it left off on Monday and retained the upward momentum. Broad-based gains were seen on the S&P 500 index, led by some of the weaker sectors recently including the financial and energy sectors. The US dollar had also managed to climb up to last week’s levels, lifted by the data indicators.

Notably, crude oil prices made headway overnight, printing a 1-week high for WTI futures and settling at $48.50 per barrel into Friday morning. Reports of a disruption to oil supplies in Libya had given oil prices a boost overnight. A slightly lower-than-expected private API report of a 1.91 million barrel increase had also been registered, supporting prices and energy stocks alike this morning.

Asian markets would find the optimism difficult to ignore during the day. Early movers in the region including the Nikkei 225 and KOSPI 200 were all found with mild gains, extending yesterday’s increase. Opening calls for the Hong Kong and Singapore market expect moderate gains to ensue this morning. For the local Straits Times Index, a strong resistance ahead of the 3200 remains, though the recent high of 3177.90 may be a real test for prices today.

For the day ahead, the Bank of Thailand will be releasing their monetary policy decision although no change is expected. The post-Asian hours would likely see the attention showered upon UK’s Brexit trigger while the US will also release their February pending home sales data. 

Yesterday: S&P 500 +0.73%; DJIA +0.73%; DAX +1.28%; FTSE +0.68%

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