US earnings resilience

Global market sentiment was seen picking up a notch overnight with Wall Street gaining on earnings despite the uncertainty that persists on US-China trade.

Against fears for the worse, the Q3 earnings season in the US saw a good opening with major lenders reporting their performance. JP Morgan notably had been one to reflect the resilience in the consumer sector, going on to reassure the market concerned with the economic slowdown. Record revenue that came in above the Street’s expectation likewise had been the case for Citigroup, assisting in the climb for the financial sector. Looking at the sector ETF, the XLF ETF, prices had evidently made its way to the earlier resistance at around $28.17, eyeing the earlier high. The likes of Netflix and IBM will be key ones to watch going into the session ahead for potential volatility to their share prices. As far as the comprehensive S&P 500 index or the Dow is concerned, prices largely exhibit similar trend awaiting further direction from both earnings and US-China trade this week.

Source: IG Charts

On FX, while the improvement in sentiment from the abovementioned earnings boost had seen to USD/JPY touching a fresh 3.5-month high at $108.89, gaining the focus among major currencies had been the British pound. The greenback had continued to lose ground against the British pound overnight. A week focused on politics as well had seen this issue getting positive sentiment with the latest claim that a deal is close amid meetings between the UK and EU driving up the cable. Prices touched a fresh high since late May, testing the resistance at $1.2751. The potential lack of support from the UK parliament for any deal continues to represent the risks ahead which the sterling is expected to remain sensitive towards.

Source: IG Charts

Asia open

With the US earnings optimism on hand, Asia markets can be seen broadly trading higher in the early hours. Breaking news of China threatening to retaliate if US passes the Hong Kong bill and the IMF’s latest downgrading of the global growth forecast appear to be doing little to the trading action so far this morning, but remains items highlighting the uncertainty in outlook. Notably, this morning saw Bank of Korea cutting interest rates by 25 basis point as expected. South Korea remains amongst Asia economies the most affected by the on-going trade dispute and concerned with regards to the growth trajectory, not a surprise here seeing this follow after their last move in July.

For the day ahead, look to the series of UK and eurozone data including inflation while more US earnings, retail sales data and beige book will also be in the lot.

Friday: S&P 500 +1.00%; DJIA +0.89%; DAX +1.15%; FTSE -0.03%

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