Asia morning update

Mixed earnings attributed to the slide in US markets on Wednesday, likely to be a drag for Asian markets this Thursday. 

Traders
Source: Bloomberg

US markets weighed

Forget the optimism brought about by Caterpillar Inc. on Tuesday, Wednesday’s US session had been one dominated by the decliners. The disappointment in earnings from the likes of Chipotle Mexican Grill Inc. and soft guidance from Advanced Micro Devices Inc. brought the stocks to the worst performers’ positions on the S&P 500 index. The index itself at -0.47% also saw the worst one-day percentage drop since early September. Losers had also outnumbered the gainers on the Dow as investors pared back some of gains, digesting the bulk of earnings on Wednesday.

Notably, despite the positive set of data out from the US on Wednesday, the USD slipped against most of the major currencies. Better than expected Q3 GDP from the UK and anticipation for Thursday’s European Central Bank meeting had brought the European currencies higher against the US dollar. The US dollar by itself had also been a victim of the latest Fed chair speculation with the latest highlighting of Fed Yellen by President Trump yielding the change. The exceptions nevertheless lie with the commodity currencies as USD/CAD and AUD/USD saw changes on monetary policy expectations. Watch for the ECB meeting ahead, serving as the key risk event for the day ahead.

Down day for Asia

With this downturn in US markets, confidence is expected to be undermined for Asian equity bourses. Early movers in the region saw mixed performances thus far, though the bulk had certainly been caught in losses. The Japanese Nikkei 225 had been one to escape the gloom despite seeing the yen on the climb, keeping the market focused on earnings in the day.

Separately, the local Singapore market saw the first of Q3 bank earnings starting with OCBC Ltd. this morning. The outperformance from this local bank, with the 12% rise in profit, had been attributed primarily to a rise in interest income while trading income slipped. As expected, the non-performing assets continue to reflect the pressure in the oil and gas sector, though the improvements in economic activity had certainly helped to counter this gloom.

Despite the significant weightage of banks on the local STI, the macro picture may retain its stronghold on price movements in the day. Keeping optimism in check today would also be a rare note from MAS MD, highlighting market risks. Watch for Singapore’s September industrial production data and Hong Kong’s trade updates, though the key item for Thursday would obviously be the ECB meeting ahead.

 

Yesterday: S&P 500 -0.47%; DJIA -0.48%; DAX -0.46%; FTSE -1.05%

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