Soft start to the week

Asian markets look set for a soft start to the week with a lack of leads over the weekend, a phenomenon we have probably been less accustomed to since the US election. 

Source: Bloomberg

The US market will be closed on Monday for President’s Day and a month since the inauguration of the 45th President of the United States, we have seen President Donald Trump being more than just a critical influence for the markets. Certainly over and above the improvement in economic conditions, the President had lifted optimism for the markets. However as US indices flicker along year-end forecast ranges, jitters have also evidently picked up.

Ahead of the long weekend, US indices were seen with mild gains, the S&P 500 closing just 0.2 point shy of February 16th’s all-time high on Friday in a late rush. The CBOE volatility index (VIX) had meanwhile spent a portion of Friday above the 12.0% mark, reflecting a pickup in market volatility as the market continue to evaluate the growth potential the new administration can bring.

Meanwhile early morning data came from Japan showing a slide of the trade balance into deficit for the month of January. Moderating exports, which missed market expectation at 1.3% year-on-year, coupled with higher than expected imports growth, contributed to the first trade deficit printed in five months. Nevertheless seasonal effects have been blamed, the Nikkei 225 however, remain weighed with USD/JPY movement a contributing factor as well.

Asian markets are poised to open the week with muted movements. Early movers in the region, including the KOSPI 200 and ASX 200 were all seen in moderate red when last checked (9.00am Singapore time). For the local bourse, the focus will be on the domestic economy in the day. Notably, Singapore’s Budget 2017 will be revealed in the later part of the day and could drive expectations for the market. Although we have seen an upward revision to Singapore’s Q4 growth, the government is unlikely to neglect near term growth concerns. The balance between shorter term growth boosters and long term economic transformation needs is likely to be the focus.

Eyes are also set on Thailand’s Q4 GDP during Asian hours while Greece and UK are expected to be in the spotlight during the European session, playing to the risk-on trades.

Friday: S&P 500 +0.17%; DJIA +0.02%; DAX +0.00%; FTSE +0.30%

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