Asian bourses are expected to play catch-up at the start of a packed trading week while keeping a keen eye on the flurry of events and data releases.
Job market joy
Just as the optimism appears to be waning, US markets had once again been jostled up by the positive jobs data. Coming in at 209k additions, the latest non-farm payrolls had been another reaffirmation of the robust labour market, topped off with unemployment rate and average hourly earnings that came in line with expectations. That said, the bump delivered to the S&P 500 index had been moderate as markets await major retailers earnings this week, a sub-sector which had been under immense pressure from online retailers of late.
The apparent impact of the July’s labour surprise had gone to the US dollar. USD index shot up from sub-93.00 levels, to a high of 93.774 post-release before subsiding to trade just below 93.500 at the start of the new week. Correspondingly, US 10-year treasury yields returned to hang above 2.26%. Much of the debate had been on whether we had just witnessed the commencement of a US dollar reversal, though the jury’s likely out until we gain insights into this week’s inflation updates, one that the Fed has seen greater hurdles in meeting their target.
There will be no denying Asian markets the positive leads from last week even with the latest set of sanctions imposed upon North Korea. Responses from the North Korea leaders remain uncertain, though early movers in the region appear to suggest that they are not expecting retaliations, chugging higher as we pen this. The Bank of Japan will likely be relieved with the $110 psychological support holding, and the $110.80 trade for USD/JPY this morning has certainly inspired the Nikkei 225.
Supporting Asian markets on the leg higher had also been the uptick in crude prices as anticipation sets in for the OPEC compliance meeting commencing today. The two-day meeting is expected to address concerns over countries overproducing despite pre-agreed targets. It certainly does help with the latest Baker Hughes rigs count data trending lower, down by a count of one. Watch for a resurgence above the $50 per barrel for WTI futures should we receive positive sound bites over the two-day meeting.
One for the radar will also be the strong momentum seen in bitcoin prices. Surging past $3000 for the first time, bitcoin has all but faltered since last week’s split. There seems to be no beating the cryptocurrency popularity even with the splinter.
In addition to the OPEC meeting, the market is expected to keenly follow comments from Fed speakers including Federal Reserve Bank of St. Louis President James Bullard (10.45pm Singapore time) for his outlook prior to Friday’s CPI release. The Asian session meanwhile expects foreign reserves updates with China’s July update one to follow. Indonesia’s Q2 GDP release will also be due any time in the day.
Friday: S&P 500 +0.19%; DJIA +0.30%; DAX +1.18%; FTSE +0.49%