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For Asian markets, the keynote event this Monday likely centres on Japan’s snap election results.
Building on the tax reform glow on Friday morning in Asia, we have certainly seen US equity markets outperform in Friday’s session. The Dow, S&P 500 index and NASDAQ indices all touched record highs, sustaining the stretch of a record-making run. Sectoral breakdown of the S&P 500 index confirmed this trend with all but the real estate and consumer staples sectors in gains. Look ahead to the extensive set of earnings reports to come this week in furthering this confidence in the stock market.
For the US dollar index, the confluence of tax reform optimism and risk-sentiment depletion amalgamated in the 0.19% gain for the week. The crucial step of delivering the budget resolution would nevertheless be one of many in the tax overhaul journey, ahead of the year-end deadline previously determined by Republican officials. For the nearer term, I am inclined to believe that the market would allot their attention to the data drivers this week including the US Q3 GDP due Friday. A mixed set of economic indicators arriving of late certainly provides the potential for growth to surprise, one to follow.
Taking the spotlight on this Monday morning in Asia would be the results stemming from the Japanese election. While the win by Prime Minister Shinzo Abe’s Liberal Democratic Party had been widely expected, the strong mandate awarded via the landslide win made all the difference for markets this morning. Representing fiscal and monetary policy continuity, the two-thirds majority rule provided the Nikkei 225 with the boost of more than 1.0% when last checked. For USD/JPY, the election effect had also been apparent with prices oscillating $114 this morning, eyeing the $114.40 resistance ahead.
With gains in the US and the favourable Japanese election results, we certainly have ample positive leads on hand this morning. Besides the Japanese market, early movers such as the KOSPI and ASX200 have all been seen with mild gains and this is expected to extend to other key markets in the region as well. For the local Straits Times Index, investors will be looking to see if a seventh consecutive session of gains may be garnered to challenge July’s 3354.71 high.
Watch for the series of data due in the region today including China’s property prices, Singapore’s inflation and Taiwan’s industrial production numbers.
Friday: S&P 500 +0.51%; DJIA +0.71%; DAX +0.01%; FTSE 0.00%