Asia market morning update - flat markets

It is likely to be another day without fresh leads that would see to the continued state of consolidation for markets.

It appears that little moves the market other than US and China trade news of late, the concrete kind we refer to, as the outlook remains obscured by this issue. Overnight markets concluded near neutral across the likes of the Dow and the S&P 500 index despite better than expected December new home sales and ISM non-manufacturing readings. This puts the likes of the Dow back to levels just ahead of the 76.4% Fibonacci retracement level at around 25700 that is serving as a support. The S&P 500 index meanwhile was seen meandering around the 2800 level lack of momentum. One thing to perhaps look towards will be Friday’s jobs data for more clue of the economic health as we await the clearance of this trade issue clouding the outlook for a forward-looking market.

One notable development from yesterday’s session had been the updates coming through from the China’s National People’s Congress’s 2019 work report. The key takeaways had been China’s keenness for flexibility in growth target, while at the same time exhibiting the commitment in pivoting the focus towards growth.

While largely expected, the announcement of the lowered growth target of 6.0% to 6.5% for 2019 against the ‘around 6.5%’ in 2018 had nevertheless taken a toll upon Asia markets. This decision is as much as a recognition of the uncertainties, both domestically in dealing with deleveraging priorities and externally from the trade headwinds, as it is likely politically driven to avoid missing target on China’s 70th anniversary.

Meanwhile in comparison, the Chinese market took the lowered targets in its stride with the accompanying announcement of a bigger-than-expected corporate tax cut one to shore up sentiment. This had pushed some of the Chinese indices including the CSI 300 into overbought territory, one to watch for whether the momentum would sustain into the midweek amid the vacuum of indicators. Examining the outlook, the market remains a trade driven one as we await the confirmation and details of the trade deal. Past that, however, the latest set of announcements does affirm the Chinese authorities’ willingness to put policy into action to keep the market going.

Asia markets are due to open with little direction this morning and little in store to watch in the session after the Aussie GDP release this morning. Disappointing slightly at 0.2% quarter-on-quarter against the 0.3% consensus, which had also been Q3’s results, the AUD/USD saw a slight pop to a 3-week low of about $0.7055 when last checked. Likewise the ASX 200 saw a slight turn from the uptrend in the morning, but remain elevated as yet. Little remains in the way ahead of US ADP employment, trade balance and Fed talks.


Yesterday: S&P 500 -0.11%; DJIA -0.05%; DAX +0.24%; FTSE +0.69%

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