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Asian markets would find the non-farm payrolls data to await into the end of the week.
Of slim odds and jeering democrats, the healthcare reform vote’s passing had probably not been within the market’s expectation after earlier failures. The impact had been immediately registered within the healthcare sector which saw strong gains on the S&P 500 index at +0.59% as of Thursday’s close.
We have previously noted that the healthcare reform would translate to the freeing up of room for the deficit-laden US government. This could have a first order impact on the passing of the tax policy and a second order impact in benefitting the market, especially capital intensive industries, in the longer term.
Overnight trades meanwhile saw pressure befalling energy stocks with a 1.90% slide in the sector on the S&P 500 index. WTI prices plunged to the depths of sub-$46.00 per barrel (bbl), with the steep move a part of the broad concern of the supply glut. While the OPEC delegates stepped in to reassure the market that an extension to their current supply curb is likely to materialise, the market had instead focused on the lack of further cuts possible.
Indeed with US output showing a steady uptrend and OPEC cuts limited, the pressure for prices appear to be on the downside in the short-run. Overall, the markets could find the consolidation sustain until the release of the upcoming NFP data where a strong consensus of 190k had been penned in according to Bloomberg’s survey.
The passing of the healthcare reform bill itself may not have a material impact upon trade in the Asian session. However, the downturn in Asian bourses after yesterday’s slide in services PMI could sustain according to our opening calls. Investors are likely taking some money off the table ahead of Friday’s NFP which could serve as a risk event after last month’s drop.
Many of the Asian indices were also seen highly elevated, likely leading to cautious trading within markets. Specifically, a plunge back to sub-3200 levels for the local STI could lead to markets believing that we have seen a false break of the key psychological resistance and spark further declines.
Look ahead to RBA’s monetary policy statement in the morning ahead of retail sales and trade updates from Hong Kong and Malaysia respectively. Indonesia’s Q1 GDP will also be expected any time in the day and could inject some upsides for the market. They excitement is however expected to be built in the US session with a series of Fed speakers lined up in addition to April’s NFP release.
Yesterday: S&P 500 +0.06%; DJIA -0.03%; DAX +0.96%; FTSE +0.19%