Asia market morning update - thin markets trade in Asia
The lack of a US-China deal announcement dealt little blow to sentiment overnight with the attention shifting towards growth with US labour market updates into Friday and amid thin market trade at the end of the week.
Despite the anticipation for a deal announcement, President Donald Trump’s latest update that no deal will be made this week did little to dent sentiment with his eagerness to see it happen clearly shining through. Speaking of the ‘very monumental’ deal, a timeline of four to six weeks may be the earliest that it would be established altogether pointing to sustained uncertainty moving forward. Still, prices from USD/JPY to US indices had reflected little disappointment with this outcome coming within expectations.
Trade talks continue into Friday as the next steps remain unknown at this point. Look to the shifting of attention towards growth as the non-farm payrolls update unveils on Friday. While upsides may be limited with surprises here, a significant uptick from the 20K will be needed to reassure investors that we are not headed in the direction of a labour market contraction to keep markets afloat.
Bullish oil market
On commodities, the bullish momentum for crude oil had been apparent despite the slight dip this week on the unexpected US inventory build. Brent and US crude’s acceleration in upward momentum on the back of tight supply saw to the former topping $62 per barrel (bbl) and the latter trading briefly above $70/bbl. As with equity markets, the uptrend had also been underpinned to a large extend by the receding growth worries and the trade hopes this week, trailing the set of better than expected PMI numbers out of US and China. This may be a sweet spot for prices to keep going at present seeing that the levels corresponding to November 2018 levels and not at a point to invite inflation worries that could affect growth down the road.
Look to the continued upward momentum into the end of the week with the latest lauding of trade talks progress from President Xi Jinping and the US rig count report into Friday for leads.
As told above, President Xi Jinping had commented via Xinhua this morning lauding progress in trade talks and calling for early conclusion of negotiations, echoing President Donald Trump in channelling positivity for markets. USD/JPY jostled higher on the update, last seen at 111.75. Early movers including the ASX 200, however, saw little reaction towards the news. This will likely keep the rest of the Asia region supported in the thin market trade today with China and Hong Kong joining Taiwan on market holiday. Once again, watch for any signs of caution towards the end of the session with the US NFP release coming in after Asia hours.
Yesterday: S&P 500 +0.64%; DJIA +0.21%; DAX +0.28%; FTSE -0.22%
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.
Trade on commodities
Trade commodity futures, as well as 27 commodity markets with no fixed expiries.1
- Wide range of popular and niche metals, energies and softs
- Spreads from 0.3 pts on Spot Gold, 2 pts on Spot Silver and 2.8 pts on Oil
- View continuous charting, backdated for up to five years
1In the case of all DFBs, there is a fixed expiry at some point in the future.
Live prices on most popular markets
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.