Asia market morning update - jobs report reassurance

Asia markets are slated for a positive start against the backdrop of the ‘goldilocks’ March jobs report out of the US on Friday.

The cause for optimism had significantly risen with last week’s updates, but a sense of cautiousness ought to prevail for markets.

Friday’s jobs report had once again invoked the sense of a goldilocks condition for US markets with the strong hiring numbers and slower-than-expected wage inflation, altogether a supportive condition for equity markets. At 196,000 additions for non-farm payrolls, this had been above the market’s 180,000 expectations which certainly lay to rest some of the worries of contraction with regards to the 20,000 weak February showing. This is while unemployment rate kept at the 3.8% low and average hourly earnings growth turned up slower than expected at 0.1% month-on-month against February’s 0.4%, providing no impetus for the Federal Reserve to react. It had been a case where the greenback had benefitted as well, enthused by the return of strong jobs additions. USD index up a touch at 97.40 levels into the end of last week.

Look to this optimism to carry through to Asia at the start of the week with the expectations further built for a benign Fed while the US labour market showed resilience in growth, keeping concerns of a slowdown at bay. As told in our week ahead, a busy week lies ahead of us at the start of Monday with updates ranging from Fed minutes to Singapore’s semi-annual Monetary Authority of Singapore (MAS) meeting and Chinese trade numbers. Much of what may move markets sits closer to the end of the week and could continue to warrant caution given the strong optimism currently baked into the market.

Levels check

S&P 500: The S&P 500 index had swept past the 2870 resistance in the previous week with the NFP report at the end of the week to help. Prices are now eyeing the September 2018 all-time high at 2940.91 with the uptrend intact, although questions are also raised as to what could drive it further. Watch the key CPI update this week with any surprises on the upside to cap gains. US-China trade talk uncertainty carries on though markets appear to grow increasingly desensitized with little fresh breakthroughs.

HSI: The upward momentum for various Asia indices such as the Hang Seng index can be seen gathering in the previous week as prices head into overbought territory. While the HSI is still expected to go ahead further returning from Friday’s holiday and the bias on the upside, watch the slew of Chinese data such as Friday’s trade numbers to support further upsides.

GBP/USD: Brexit chaos continues this week as Prime Minister Theresa May is expected to seek an extension to the 12 April deadline this week. Prices can be seen attempting a breakout on the downside of the current wedge pattern, one to watch as the bias gathers on further GBP weakness in light of the lack of resolution on the issue.

USD/SGD: This would be one pair to watch this week with both the MAS policy meeting statement and the advance estimate of Singapore’s Q1 GDP due on Friday. As shared in our MAS preview write-up, no change is expected but it will mostly be watching the Q1 GDP reading for any deviations on USD/SGD movements into either ends of its current range-bound trade.

WTI: The uptrend for crude oil had been underpinned to a large extent by supply factors of late and the weekend update of Libya unrest further adds to this phenomenon. Prices on the WTI can now be seen attempting a break on the upside with the $63.54 resistance in view, one hurdle to cross this week with the bulls strong in control.

Friday: S&P 500 +0.46%; DJIA +0.15%; DAX +0.18%; FTSE +0.61%


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