A quiet start to the week, but market sentiment still improving

It was a relatively quiet Monday for global markets. And for many, that may well be a welcomed fact.

A generally quiet Monday’s trade

It was a relatively quiet Monday for global markets. And for many, that may well be a welcomed fact. Volatility, while picking up ever so slightly in Wall Street trade last night, remains at comfortable levels, with the VIX currently trading at around 15. The calm on the trade-war front is naturally behind this dynamic. But nerves have also been soothed by the prospect of widespread global-central bank monetary stimulus. The day ahead offers little on the data front to really worry investors for the time being. Attention still remains fairly fixed on the ECB at the end of the week.

Sentiment still relatively positive

Really, if you had to call it either way, last night’s trade was a notionally positive one. Granted, equity markets didn’t do a great deal. The S&P 500 closed flat. The DAX was marginally higher. The Nikkei did put in a good session, as did Chinese shares on hopes for more monetary stimulus in China’s economy. But the better read on the prevailing market sentiment came from the currency, bond and commodity markets. Fears about a slowdown in the global economy eased. Government bond yields have rallied across the globe. Gold prices are down; oil prices are up. The JPY is lower; the AUD is higher.

ASX pops in a flat start to the week

The ASX 200 in particular began the week on a flat note. It was more-or-less a mirroring of Wall Street trade on Friday night. The session ended in positive territory, however it was on very low activity. Just another Monday, really. But all-in-all, there remains the general sense of bullishness in the market that characterized last week’s trade. China’s weak trade-balance data was the big story in Asia yesterday. And that did manifest on the ASX. Materials stocks were lower, as were energy stocks, as some nerves were rattled about the prospects of Chinese economic growth. The impact was negligible, however.

The ASX following global themes

The ASX is highly macro driven right now, and its fortunes are closely tied that of Wall Street, the outlook for the global economy, the trade-war, and global monetary policy. Hopes are growing that all of those issues are demonstrating signs of improvement. As mentioned, Wall Street’s VIX is shifting markedly lower, and is now in the realm generally associated with risk-taking behaviour. The global environment is still remarkably unstable, so any sense of calm in global markets could quickly evaporate. But while clear air remains, so does the strong chance of further upside in equity markets. New all-time highs may well enter investor’s crosshairs once again.

UK GDP data beats

From a purely fundamental point of view, UK economic data captured the most attention overnight. UK GDP data was released, and broadly beat economist estimates. It printed 0.3% month-on-month, versus a forecast figure of 0.1%. Concerns that the UK could be tip-toeing towards recession, especially amidst all this Brexit uncertainty, were assayed slightly by the news. Bets were marginally unwound that the Bank of England would have to leap to the UK economy’s rescue to stave of recession. The odds of a cut from the BOE before year end pulled back to a 30% chance.

Cable can’t shake weight of Brexit

The GBP had another crack at rallying after the UK GDP release – and managed to come close to challenging price-resistance around 1.24. But the barrier proved too strong. It would seem the weight of Brexit is too heavy for traders to be too optimistic about the prospect of the UK economy, right now. Uncertainty reins in Brexit, and so does a downtrend for the Cable. A UK general election looks on the cards presently. But how this will come about seems messy. That disorder wasn’t helped by news that House of Commons speaker John Bercow resigned overnight, adding another thin layer of bureaucratic complexity to the Brexit process.

Markets to gauge Australia’s animal spirits

NAB Business Confidence is released this morning, and could prove the news highlight of the local session. There’s the general view prevailing at-the-moment that Australian business is suffering from a small crisis of confidence. And that’s putting a dampener on the outlook for the Australian economy. Australia’s animal spirits are clearly in a state of hibernation. It will take time for them to wake-up, and there’s little expectation that that will happen quickly. But with the government and the RBA pulling levers to bring this about, today’s NAB data will give a small insight into whether such efforts are beginning to work.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

Please see important Research Disclaimer.

Take a position on indices

Deal on the world’s major stock indices today.

  • Trade the lowest Wall Street spreads on the market
  • 1-point spread on the FTSE 100 and Germany 40
  • The only provider to offer 24-hour pricing

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
liveprices.javascriptrequired
liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.