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Asia morning update - waiting for leads

Moderate gains are expected for Asia markets, returning to catch up to Wall Street that had rallied in the absence of which. That said, the wait continues for the US-China trade talk next week amid the lack of fresh impetus.

State of Union campaign

Early gains in the week for US markets on the back of earnings shifted into a flat tone with little derived from President Donald Trump’s State of the Union speech. Circling bipartisan, border wall and the age-old issue of China trade imbalances among others, the President offered little to excite markets that had, in the past, received doses of tax cuts and deregulation under the current administration. On the other hand, the speech itself may have once again invoked concerns with looming government funding issue and the US-China trade talks next week.

Altogether, this saw Wall Street halting the streak of gains as the likes of the Dow and the S&P 500 indices ended flat to mild red in the Wednesday’s session following the address by the President. For the S&P 500 index, while prices may appear to have surfaced from the 61.8% Fibonacci retracement level in the uptrend, the test is up ahead at the 2800 level. It would not be a surprise finding a period of consolidation in what looks to be an inverse head and shoulder pattern for the index. This is with approximately 50% of the earnings report yet to be seen and as one would note, sending broadly mellow outlook thus far. Unless a breakthrough comes through from the US-China trade negotiations, it would be difficult to find this uptrend continuing in the US.

On shares, watch for the likes of Twitter before the market open this Thursday, one for the communication services sector that had been lifted of late from Google’s parent Alphabet.

Asia open

While the likes of China, Hong Kong and Taiwanese markets remains away for the Chinese New Year holidays, the local STI will be among which expected to return and catch up to gains clocked on Wall Street in the past sessions. Early movers in the region, noticeably the ASX 200 continued to rise, unfazed by the overbought situation as prices set eyes on the 6100 level.

For the day ahead, a couple of central bank meetings are expected across the Philippines, India and the UK, where a hold had been the consensus for all. Otherwise, it would likely be a light volume trade in this holiday shorted week for Asia markets.

Yesterday: S&P 500 -0.22%; DJIA -0.08%; DAX -0.38%; FTSE -0.06%

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