Asia to be cautiously upbeat

USD retreat added to oil supply concerns which gave oil futures a lift on Tuesday.

Data Board
Source: Bloomberg

Soft US data has pushed out the possibility of further Fed rate hikes to the second half of the year. Meanwhile, a third day of strike by Kuwaiti oil workers was estimated to cut the nation’s crude output by half, according to CNBC. Subsequently, WTI rebounded 3.3% and above $40, nearing the 2016 highs. Risk appetite improved in the commodity space, with precious and industrial metals advancing on the back of a weaker USD. As a result, most major currencies and commodity currencies swung higher, while the Japanese yen depreciated.

 

However, mixed US earnings reports muddled the performance of US equities, which could cast a bit of a pall on Asia today. While US indices closed at 2016 highs, the move was less than half a percentage. Both S&P and the Dow closed up +0.3%, with the former ending fractionally above the psychologically key 2100 level. Technology stocks were laggards, with shares of Alphabet, Amazon, and Apple declining, weighing on the Nasdaq, which closed down -0.4%.

Australia and Japan were trading cautiously higher in early Wednesday, and I expect the rest of Asia to operate in the same mode. There is still no fundamental reasons for risk assets to go higher, given a dim global growth outlook.

It will be a relatively quiet day for data in Asia. Japan’s March trade was not as bad as expected, with exports and imports shrinking -6.8% YoY and -14.9% YoY respectively, compared to -7% and -16.6% expected. China’s leading economic index is due later tonight.

In Singapore, Capitaland reported Q1 revenue of S$894.2 million, and net profits of S$218.3 million, commenting that residential sales in Singapore, China and Vietnam did well in the quarter. However, the property developer noted that cooling measures continue to weigh on the Singapore market. The Singapore Exchange will also report its Q3 earnings today.

 

Yesterday: S&P 500 +0.3%; DJIA +0.3%; DAX +2.3%; FTSE +0.8%

 

*You may wish to follow me on twitter at https://twitter.com/BernardAw_IG

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. 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. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.