Asia morning update - Fed Powell dovishness

Muted movements are again anticipated for Asia markets with expected Fed dovishness seen and the lack of fresh leads particularly on trade. More of the same is due midweek, awaiting the data releases into the end of the week.

Wall Street was seen treading lightly in Tuesday’s session with the sentiment suggesting the reluctance to err on either side without further details on trade, the overshadowing factor moving markets at present. Both the Dow and the S&P 500 index concluded near neutral at -0.13% and -0.08% respectively, with the latter putting up a good fight against the 2800 resistance in the session.

Notably, we did have Federal Reserve chair Jerome Powell in his testimony affirming the patient stance towards interest rate hikes that remained supportive for markets. While emphasizing the US economy’s healthy outlook, there had again been mentions of the external headwinds including the slowdown seen in China and Europe, and uncertainty surrounding trade warranting caution from the Fed. The view towards inflation had also been one championing the expected stagnant rates to come, with the Fed chair citing inflation pressures as ‘muted’. Such a view can be seen shared by the US economy as evident in the latest reading from the latest February conference board consumer confidence report. Speaking of which, despite the rebound of the consumer confidence index to 131.4, balancing some of the gloom stemming from the recent retail sales release, the market is clearly distracted by the likes of trade.

Separately on Brexit, it is worth noting that with the latest turn in the UK, the diminishing likelihood on a no-deal Brexit can be seen opening up room for strengthening of the currency. GBP/USD touched a fresh five-month high yesterday, breaking up firmly to trade above $1.32 as the likelihood of a delay to the March 29 deadline increases. Prices had been oscillating mostly around $1.13 level of late, taking a midpoint between the post Brexit lows of around $1.12 where support came in strong and the pre-referendum $1.14 trade amid the uncertainties. With Prime Minster Theresa May’s latest offering of a delay vote, prices can be seen moving north and perhaps in an offshoot possibility that a no-Brexit happens, the $1.14 level should be where we set our eyes upon.

On Asia markets, expect the lacklustre trade to sustain once again evidently with the lack of novel market-moving developments in the picture. Other than Hong Kong’ Q4 GDP, it is expected to again be a quiet Asia session though with the Trump-Kim summit humming on in the background that would be more prevalent for politics. Eurozone sentiment numbers up next ahead of the final reading for durable goods, but otherwise it will be a second day watching Fed Powell’s testimony to the House.

Yesterday: S&P 500 -0.08%; DJIA -0.13%; DAX +0.31%; 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.