Asia morning update

Friday saw the two most watched items conclude with unexpected results, while the day itself had also been coloured by geopolitical concerns.

Source: Bloomberg

Let’s start with the CBOE volatility index which saw a slight uptick on Friday, up on either side of 13.0, certainly reflecting the reactions towards the slew of feeds. After geopolitical concerns heightened with the strike on Syria, the US March non-farm payrolls (NFP) number brought in another surprise. At 98k, US payroll gain had been the weakest since May 2016, creating a dent in equity markets. The reaction however did not last long with the market pinpointing the set of numbers on weather elements.

Additionally, the unemployment rate had also turned out lower-than-expected, keeping sentiment buoyant. US markets eventually closed near neutral, with earnings releases this week likely to deal a greater impact on markets, especially against the backdrop of consolidating prices.

For the US dollar, the movements had been an intriguing one. Initial reactions towards the payrolls data saw an unloading of the US dollar, with the USD index sinking to the day’s low at 100.52. Similar to the movements within equity markets, the dip had been brief for the USD. It was helped further by New York Federal Reserve President William Dudley’s comments on monetary policy post-NFP.

Despite the disappointing data, the Fed President went on the hawkish end, clarifying his earlier comments on the ‘little pause’ on short-term rate normalization. A presumably shorter than expected pause emphasized by the Fed President had certainly given the market reasons to bid up the USD. Hence, despite the disruption of geopolitical concerns and weak payroll numbers, the currency market appear to be sticking close to the broad themes of growth and monetary policy tightening. Moving forward, with a lack of tier-1 data in the day, today’s appearance by Federal Reserve chair Janet Yellen would likely be the key influence for currency market action.

For Asian markets, the relatively peaceful conclusion of the meeting between US President Donald Trump and China President Xi Jinping had probably been the best scenario for Asian market bulls. The meeting certainly did not appear ‘very difficult’ as with what President Trump had pre-empted for markets. Early movers have seen mixed result thus far, while Hong Kong and Singapore markets are expected to come online with mild gains. Look ahead to Taiwan March trade numbers while China’s loan conditions upload may be due any time between 10-15 April.

Friday: S&P 500 -0.08%; DJIA -0.03%; DAX -0.05%; FTSE +0.63%

IGA, may distribute information/research produced by its respective foreign marketing partners 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.

This information/research prepared by IGA or IG Group is intended for general circulation. 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 or 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. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.

Find articles by writer

Find out more about