Asia to be cautiously upbeat

USD retreat added to oil supply concerns which gave oil futures a lift on Tuesday.

Data Board
Source: Bloomberg

Soft US data has pushed out the possibility of further Fed rate hikes to the second half of the year. Meanwhile, a third day of strike by Kuwaiti oil workers was estimated to cut the nation’s crude output by half, according to CNBC. Subsequently, WTI rebounded 3.3% and above $40, nearing the 2016 highs. Risk appetite improved in the commodity space, with precious and industrial metals advancing on the back of a weaker USD. As a result, most major currencies and commodity currencies swung higher, while the Japanese yen depreciated.

 

However, mixed US earnings reports muddled the performance of US equities, which could cast a bit of a pall on Asia today. While US indices closed at 2016 highs, the move was less than half a percentage. Both S&P and the Dow closed up +0.3%, with the former ending fractionally above the psychologically key 2100 level. Technology stocks were laggards, with shares of Alphabet, Amazon, and Apple declining, weighing on the Nasdaq, which closed down -0.4%.

Australia and Japan were trading cautiously higher in early Wednesday, and I expect the rest of Asia to operate in the same mode. There is still no fundamental reasons for risk assets to go higher, given a dim global growth outlook.

It will be a relatively quiet day for data in Asia. Japan’s March trade was not as bad as expected, with exports and imports shrinking -6.8% YoY and -14.9% YoY respectively, compared to -7% and -16.6% expected. China’s leading economic index is due later tonight.

In Singapore, Capitaland reported Q1 revenue of S$894.2 million, and net profits of S$218.3 million, commenting that residential sales in Singapore, China and Vietnam did well in the quarter. However, the property developer noted that cooling measures continue to weigh on the Singapore market. The Singapore Exchange will also report its Q3 earnings today.

 

Yesterday: S&P 500 +0.3%; DJIA +0.3%; DAX +2.3%; FTSE +0.8%

 

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