Asia market morning update
The abating of fears continued on Wall Street into Tuesday, creating a constructive open for Asia markets. That said, regional markets look to a mixed commencement awaiting the next lead.
Stay with equities
Tuesday’s gains for Wall Street had likely validated the overselling on fears from growth. As we have seen previously, US indices have continued the recovery, aided by the slight uptick in US 10-year treasury yields and the sustained streaming in of suggestions that the fear had been overplayed for equities markets. This was despite the weaker-than-expected showing from both the March conference board consumer confidence index and the housing indications overnight, whereby the former had nevertheless stayed above the January lows.
With the rumble in the market, the gathering of concerns had been paid towards asset allocation, particularly with regards to the riskier equities in question. It is perhaps safe to say, we are mostly getting a resounding yes to staying with equities, what more with the diminished attractiveness as yields recede of late. Data would still have to be watched, but the reactions thus far had suggested that the current rate suffices in keeping the market going.
Watching EUR/GBP amid Brexit votes
The Brexit impasse remains another item at the top of our minds with the UK parliament due to see a series of votes to outline their Brexit intent. One had put the number of indicative votes at sixteen, potentially seeing a long and encumbered process in the session. Fluctuations for GBP/USD had been kept minimal, but the watch is on for further moves with the latest news of Brexit hardliner Jacob Rees-Mogg of the European Research Group suggesting backing for Prime Minister Theresa May’s deal. As it is, the EU had made clear of the lack of room for re-negotiations, thus a conclusion towards support for PM May’s deal in the series of votes this week day would be a GBP-friendly outcome that would be a long time coming. Watch the EUR/GBP pair for any decisive moves next, particularly with prices still hanging on the line at around 0.8535.
Early movers in the region can be seen losing some steam in the recovery as the likes of the ASX 200 and the Nikkei declined by more than 0.5% this morning. Some sense of cautiousness had likely returned with the mid-week breather as we watch the updates on Brexit and await the US-China meeting news from Beijing. Asia markets will have China’s industrial profits and a series of central bankers later in the day to watch for trade.
Yesterday: S&P 500 +0.72%; DJIA +0.55%; DAX +0.64%; FTSE +0.26%
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