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The focus in Asia today will be on emerging markets. After the Jakarta composite index dropped 5.6% and Thailand’s SET lost 3%, the question is whether the selling will continue today.
Last year, Thai and Indonesian equity markets generated double-digit returns, Thailand was the second best performer after the Philippines with 35% ytd, followed by Singapore’s STI of 27% and Indonesia’s at 13%.
This year, things are looking quite different. Other than the Philippines, the rest of the region is struggling to scrap by with low, single digit returns. Southeast Asian countries are all different; the commonality is that smaller economies depend on export from bigger economies such as China and Europe.
Although the eurozone is coming out of a recession and China’s deceleration has stymied somewhat, investors will weigh the prospect of slower growth, risk-reward implications of the removal of Fed stimulus and the impact of policy changes on these economies.
Crude was mostly unchanged. EIA reports on US stockpiles tomorrow with analysts expecting stockpiles to have dropped according to Bloomberg. We see Oil - US Crude consolidating as it trades towards an ascending triangle.
Catalysts are needed for a breakout from $108 for the rally to continue, immediate support stands at $106. Libya declared force majeure on four oil ports as oil security guards go on strike, resulting in a total shutdown for these facilities.
Technically Oil - Brent Crude is bullish, however consolidation is expected after the run-up. We see it trading towards support level at $108.