Asia morning update

By means of leads, we have certainly seen both US equity market and the dollar inch higher last Friday despite disappointing headline payrolls numbers. 

Chart
Source: Bloomberg

For Asian indices, the start to Monday may however remain a mixed one.

For equity bourses, the IT sector took the clear lead in last Friday’s session. Besides the phenomenal boost brought about by Apple Inc., inspired by their latest earnings report, Broadcom and Qualcomm took the lead in percentage gains on Friday with news of the intended takeover. The offer is expected to arrive Monday, one to look out for between the chipmakers. With Friday’s surge, the likes of the S&P 500 index and Dow has once again notched record closes while the VIX very briefly slipped below 9.0%. As the US earnings season draw towards a close, look to the debate surrounding the tax overhaul as the likely key theme in the period ahead for equity markets.
 

For the US dollar, the sharp dip ahead of the non-farm payrolls (NFP) release had been quickly reversed as September’s figures received an upward revision. Despite missing the market expectation for 313k additions, the 261k increase had been a fairly robust number and falls broadly in line with the Fed’s latest rhetoric dispelling concerns of lingering hurricane disruptions. The dollar had also been supported by better than expected ISM services figures, sending the US dollar index up briefly to 95.0.
 

One notable release had been the softer than expected average hourly earnings at a growth of 2.4% year-on-year, which could prove headwinds for consumer inflation figures due later and clip the wings for USD flight. One to follow alongside tax developments.

Asia markets

Asian markets are expected to sustain in a state of mixed performances. Early movers including the South Korean and Japanese markets have seen diverging changes, the latter returning from Friday’s market holiday to ride on the softer yen. One clear theme had nevertheless been the lift for energy stocks with crude prices still on the rise. Friday’s Baker Hughes rig count continued to complement the optimism for extended OPEC curb, sending WTI futures to a fresh high since mid-2015.
 

Separately, the curtain draws on the trio of local banks’ Q3 earnings report with DBS Bank’s latest disappointment. Plagued by the lingering bad debt from the oil and gas sector, the bank appears to have attempted a boost to their allowances to move past the episode and shift the focus ahead. While this may bode well for future growth trajectory, this lift in provision could take a short-term toll on share prices and local indices.
 

For the Monday day, look ahead to items including Indonesia’s Q3 GDP and China’s Q3 current account update. Markit services PMI for the Eurozone area will also be reported alongside Germany’s factory orders today. A light US session has been eyed with speeches from New York Fed’s Potter and Dudley due to speak. Expectations have been set that the latter may announce an early retirement in the day.
 

Friday: S&P 500 +0.31%; DJIA +0.10%; DAX +0.28%; FTSE +0.07%

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