Asia morning update: Weak leads for Asian markets

Record highs were once again seen for both the NASDAQ and S&P 500 index, though most US markets remained largely in consolidation. Pushing up the comprehensive S&P 500 index had been the IT and financial sectors while Monday’s top gainer, the materials sector, ended the session near neutral despite the softer USD.

Matters relating to the disclosure report on President Donald Trump appear to have snowballed with the latest involvement of Israel intelligence, capping gains for the broader US market. The political development could certainly be an unwelcoming distraction for a market waiting for further policy updates from the new administration.

While equity markets were seen trending in a sideway manner, the key move for the overnight market had been the slide in the US dollar. The dollar index had further slipped to trade just above the 98.0 figure into Wednesday morning with EUR/USD bumping down the overall index. Both politics and economic data could be seen driving this move overnight.

Specifically, the highly watched housing starts had disappointed markets, something which the improvement in industrial production could do little to cushion. The pressure for EUR/USD had also been rather pronounced, driven by the diverging trend in data performance between the US and Europe. A generally positive set of economic data have appeared to boost sentiment for EUR bulls.

Early morning data arrived from Japan and Singapore, both missing market expectations and creating further downward pressure for the respective markets. Notably, Singapore’s April non-oil domestic exports (NODX) had declined 0.7% year-on-year (YoY) despite expectations for the headline figure to moderate only slightly from the 16.5% YoY growth in March. A breakdown of the components finds that while electronics exports slowed, the main drag had been brought about by a sharp reversal in pharmaceuticals export growth. For the local STI, the first decline in NODX in four months could mean further jitters after the heavy sell-off on Tuesday.

Sharp declines have already been registered on both the Japan and Australian markets this morning, with the Nikkei 225 affected by the USD/JPY drop. Pressure from the reversal in crude prices is also expected to hold down regional bourses midweek. For the day ahead, there remains Malaysia’s inflation data and Japan’s industrial production due in Asian hours, though traders could find the Eurozone’s inflation rate of higher interest.

Yesterday: S&P 500 -0.07%; DJIA -0.01%; DAX -0.02%; FTSE +0.91%