Mixed Asia markets ahead of Fed
A mixed picture continues to characterize Asia markets ahead of the key events this week including Wednesday’s Federal Open Market Committee (FOMC) meeting conclusion.
Fed disappointment fears
As it is, there remains a sense of fear that the Fed may likewise moderately disappoint as the European Central Bank did last week that had seen the likes of the comprehensive S&P 500 index ending with a mild red at the start of the week. A clear preference for the defensive sectors had also been shown with the utilities and real estate sectors leading gains for the few and far in between.
After ECB President’s less dovish than expected rhetoric tailed the meeting statement last week, the concern resides with a repeat for the Fed. With the market pricing in at least one more 25 basis points rate cut post the July move and before year-end, any less than dovish guidance from either the meeting statement or Fed chair Jerome’s speech could therefore set the market up for disappointment.
While the Fed is evidently expected to continue holding the stance to ‘act as appropriate’, it may not be enough for the market and that had certainly seen to such a downward bias for the equity space into the meeting. Even if further cuts may eventually come along, the short-term one-week outlook for the market ceases to be a positive one on account of the Fed. For the greenback, however, the US dollar index, which is measured against six major currencies, had been strengthening on this bias through the start of the week. Prices look to be attempting a break of the highs printed earlier in May where strong resistances reside. Any break on the upside could see prices retracing some of the gains even as the uptrend is kept. One to watch.
Source: IG Charts
Amid the anticipation for the string of event risks this week, Asia markets look to continue trading mixed going into Tuesday. The Bank of Japan concludes their meeting in the day with no change to monetary policy expected and likely keen to maintain flexibility just ahead of the Fed update. A dovish stance will nevertheless be kept status quo seeing the likes of this morning’s June industrial production disappointment reflecting the slowdown.
Look to a mixed trend for Asia markets with eyes on the BoJ meeting. Positioning ahead of China’s July PMI release should also be watched for Asia markets in the day, particularly for the likes of the Hong Kong market plagued by the additional concern of domestic disruptions. US July consumer confidence will also be amongst key data to note this week on the health of the US economy to influence rate cut convictions.
Yesterday: S&P 500 -0.16%; DJIA +0.11%; DAX -0.02%; FTSE +1.82%
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.
No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.
Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.
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 40
- The only provider to offer 24-hour pricing
Live prices on most popular markets