Political influences for Asia markets

Following the gains seen across Asia from the optimism for a trade truce announcement between US and China, investors are expected to remain more coolheaded pending the updates across the flurry of G20 meetings.

Kicking the can down the road

More confusing signals continue to originate from US and China ahead of the pivotal G20 Trump-Xi meeting over the weekend. While Wall Street saw early gains on the relief for a trade truce announcement, the likes of the Dow pared gains later into the session seeing the road ahead for US-China relations remaining fraught with uncertainties. China’s insisting on the US to lift the bank on Chinese telco Huawei as part of the trade deal had also been a curveball thrown prior to the congregation between the two Presidents, illustrating the difficulties to reach a common ground for a deal.

The cooking in of the optimism since the Trump-Xi meeting had been confirmed may mean that markets would have some adjustments to do if things do go awry over the weekend. The S&P 500 index’s put-to-call ratio is seen moderating into June with the support for the S&P 500 index seen at 2915 while resistance past the earlier high would be at the 3000 handle.

Source: IG Charts

On FX, prices had likewise fluctuated with the risk sentiment. While the US dollar index flatlined, USD/JPY as the risk sentiment barometer had briefly traded back above $108 on Thursday before sliding to the middle ground at present of about $107.70 levels. The downward bias remains unchanged but watch for any knee jerk reaction that could come with more happy talks. Resistances are still at $108 prior to the next level at $108.80. On the other hand, disappointments may bring prices past this week’s low towards the $106 handle.

Source: IG Charts

Mixed open for Asia markets

A mixed open is expected for Asia markets going into the G20 meeting this Friday. Look to any sense of cautiousness setting in ahead of the Trump-Xi meeting that could invite Asia markets to pare back some of its recent gains. A string of data is expected in the day following the release of mostly in-line with Japanese releases. May’s industrial output had notably surprised to the upside for Japan this morning but it is the G20 that has the market’s attention as President Donald Trump goes about with bilateral meetings.

Yesterday: S&P 500 +0.38%; DJIA -0.04%; DAX +0.21%; FTSE -0.19%

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