Asia Morning Update: Tight-range trading

Subdued overnight movements provide Asian markets with little to draw from on the second trading day of the week. 

US Trader
Source: Bloomberg

Anticipation for drivers including earnings and central bank meetings into the end of the week may nevertheless keep prices in a tight range.

Steady overnight markets

Markets in the US barely moved a whisker from the previous close on Monday, flatlining after the strong rally from the previous week. As the attention shifts away from monetary policy amid a lack of tier-1 leads, US markets looked to earnings and saw mild disappointments in the likes of BlackRock Inc., weighing on the likes of the financial sector.

Despite the strong anticipation of outperformance in financials, we have certainly seen early EPS performance undershooting last season’s 75% surprise. The day ahead nevertheless brings a whole slew of reports from financial stocks such as Goldman Sachs Group Inc. and Charles Schwab Corp, expected to be the key drivers for prices.

Notably, Netflix Inc., Wall Street’s darling, saw Q2 2017 earnings arrive this morning, disappointing slightly in terms of earnings per share. Prices had however shot up during the after-hours trade as subscriber growth beat forecasts, particularly in the international arena, likely to lift the IT sector in the session ahead.

Bitcoin volatility

For the volatility that equity and currency markets are lacking, cryptocurrencies certainly remain bountiful. Bitcoin, which saw prices plunge past the $2000 mark at the start of the week, managed to retrace some losses to trade at $2200 levels when last checked at 8.20am Singapore time.

Underpinning the recent drastic slide in prices had been the looming 1st August deadline on software adoption decision and its cousin, ethereum, had not been spared in this episode. Adding to the concern had been Morgan Stanley’s finding which showed that Bitcoin acceptance had been on the slide, creating jitters within the market.

Asian markets

Japan markets came back online to register a drop following the USD/JPY dip last week while the rest of the Asian markets are expected to see neutral to moderate declines at the start of the session. Going against the positive wave for Asian markets on Monday had been Chinese bourses, as speculators battered prices on concerns of sustained regulatory tightening. The theme is expected to remain even as the rest of Asian markets hold relatively steady in anticipation of fresh leads. Looking ahead, some focus may be on China’s June property prices today, with concerns over the heated property market.

Watch list

Post an imminent RBA minutes release, a considerably quiet Asian session is expected with some focus likely to be on commencement of the Regional Comprehensive Economic Partnership (RCEP) talks. The Europe and US session places the emphasis on data with UK CPI and PPI, German ZEW due ahead of a series of US earnings releases.

Yesterday: S&P 500 -0.01%; DJIA -0.04%; DAX -0.35%; FTSE +0.35%

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