Asia market morning update - US-China trade deal progress

Risk-on atmosphere returns with headlines covering progress on US-China trade, one for Asia markets to cheer alongside the resilient US markets from Friday.

The developments over the weekend had not been two steps removed from US-China trade with the latest reports on the two countries closing in on a deal, one to boost markets at the fore of the week. What is interesting in the latest update is the prospective date, of around March 27, for the Trump-Xi meeting to formalize the deal that would heighten expectations going into the Monday session today. As far as early movers have suggested, both the Australia ASX 200 and the Nikkei 225 had tuned up 0.6% and 0.9% respectively, just as US futures charged ahead. This is also a continuation of the gains that had been seen in US markets on Friday, clocked despite the weaker-than-expected ISM manufacturing report. Look out to the slew of items, particularly the jobs data for the week as highlighted in our week ahead.

Notably, one would have likewise seen President Donald Trump’s latest dissent towards the strength of the greenback over the weekend. This had weighed slightly on the USD into Monday’s morning in Asia and thereby one to support regional markets into the day. The extent to which the President’s words could curb further strength, however, remains a question. As heard from ex-New York Fed president William Dudley over the weekend, further rate rises look plausible going into the second half with the data-driven Fed, one to watch March’s FOMC for longer-term interest rate outlook.

The President’s jibe at Federal Reserve chair Jerome Powell over interest rates, balance sheet management and the US dollar, notably also comes ahead of the Fed chair’s address on Friday, perhaps one to watch for any address of which. The bias for the week, however, remains on the upside for the USD in light of the strong set of labour market data expected.

Levels check

S&P 500: Resilience can be seen with last Friday’s gains for Wall Street despite the soft economic data releases. Momentum, however, remains wavering amid the lack of fresh updates on the likes of US-China trade.

All said, the abovementioned weekend news on US-China trade progress would be one to boost markets into the start of the week. Look to a decisive swing above the 2800 level into the week for confirmation of a continuation in the uptrend.

STI: The local STI would be one cheering the latest US-China trade news, though seeing the resistance at around 3278 curbing the upsides. Look to whether the positive sentiment can push prices to retest the resistance. Data such as February’s PMI today and China’s February trade on Friday may remain ones to keep the rangebound trade in play.

EUR/USD: EUR/USD will be one to look at this week amid the data releases. The European Central Bank (ECB) meets this week with no changes expected. The key is however to look for any signs of increased dovishness from ECB president Mario Draghi and the forecasts. Data-wise, risks are also towards the downside. Look to pressure back towards the $1.13 level in the week.

Crude oil: The consolidation for Brent crude oil prices continue, despite last Friday’s drop. Supply pressures meets the news on US-China trade, one to see the flatlining continue. Eye either a break of the $68 resistance or drop past support at around $63.50 out of the current zone.

Friday: S&P 500 +0.69%; DJIA +0.43%; DAX +0.75%; FTSE +0.45%

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 30
  • The only provider to offer 24-hour pricing

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
Sell
Buy
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Sell
Buy
Updated
Change

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

Sell
Buy
Updated
Change
-
-
-
-
-
-
-
-
-
-
-
-
China 300
-
-
-
-

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.