Asia markets rallying on Trump's tweet

The positive development in the form of a resumption of US-China talks and the confirmation of a Trump-Xi meeting at the G20 sets markets on fire ahead of the Wednesday Fed meeting conclusions.

Source: Bloomberg

Trump-Xi at the G20

Equity market bulls will have President Donald Trump’s latest tweets to thank whereby the highly awaited confirmation of a meeting between President Trump and President Xi Jinping had finally materialized. While this certainly is a near-term boost for markets, the question as to what can be resolved by the two leader’s meeting that had not been done so despite months of discussions keeps this as a risk factor. It may remain early stages to expect developments on the US-China trade tensions front even as we celebrate the resumption of talks, but more of these ‘happy’ talks should not be ruled out.

On prices, the surge overnight, particularly from the cyclical sectors, had sent the S&P 500 index above the 2915 resistance level to eye the April highs. Look to the Fed meeting as the key event risk in the next 24 hours that could either make or break this attempt to inch back towards an uptrend. A disappointment in the market could hit prices back to the earlier consolidation zone.

Us 500

Source: IG Charts

Fed watch

While the focus falls squarely upon the Fed into the Wednesday session, we have certainly seen the greenback strengthening overnight, though this is by no means a result of any anticipation for the Fed’s stance. European Central Bank (ECB) President Mario Draghi’s comments overnight arrived on the dovish end sending the EUR/USD sharply lower and likewise boosting the US dollar index. This had seen the former threatening to return to the earlier downtrend and the latter edge higher above resistance. Watch the Fed meeting up ahead, whereby any less dovish than expected rhetoric could set EUR/USD back again into the earlier downtrend.

EUR/USD

Source: IG Charts

Sentiment driven Asia markets

Sentiment once again drives the price movements for Asia markets ahead of the Fed meeting in light of the reigniting of hopes on US-China trade. Early movers in the region across the likes of the ASX 200 and the Nikkei 225 had both risen by more than 1.0% when last checked, notably with the Australian ASX chalking up another fresh recent high now above the 6600 level. Watch whether some sense of caution could set in later in the day with the Fed meeting conclusion on the horizon and prices leaping into overbought territory on the RSI.

Yesterday: S&P 500 +0.97%; DJIA +1.35%; DAX +2.03%; FTSE +1.17%


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