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.
In a noisy room, it is difficult to have any clear decisions made and that had been the case with overnight trade.
Ahead of Friday’s non-farm payrolls (NFP) data, the S&P 500 remained in a state of consolidation, closing near neutral on Wednesday. Apple Inc. had been credited for holding up the index after their better than expected earnings release and upbeat outlook outlined. The share ended Wednesday up 6.1% after the beautiful 3.0% surge during Tuesday’s after-hour trade, simultaneously pushing the IT sector to the top gainer spot.
Facebook Inc., had also contributed to the gain, gathering momentum ahead of their earning release. Having been handed over the baton, the social media company did not disappoint, posting an excellent set of results. Ask your intern and you would find it no surprise why. Expect the market to focus ahead of Friday’s tier-1 releases, in addition to earnings releases, though the level of noise could keep attention diluted.
Notably, oil prices were seen climbing higher this morning despite the 6.5 million barrel build-up of crude stockpiles as reported by the US Energy Information Administration (EIA). The placement of Iran “on notice” by the US sparked fear that this could be the ignition of unrests that would disrupt oil supplies, sending prices on the climb overnight.
Separately, the first Fed FOMC meeting passed as a quiet affair with both interest rates and rhetoric kept unchanged by the committee. Despite the series of concern over the actions of President Donald Trump, the Fed stuck through with the relatively upbeat outlook that they held in their December meeting where the economic projections were upgraded. The Fed had also reflected their confidence in closing in on their inflation target.
Indeed with the uptick in oil prices, rising inflation had been a trend across the region. On Tuesday, both Thailand and Indonesia had showed a significant acceleration to their year-on-year (YoY) inflation rates. The same was seen with South Korea this morning with a 2.0% YoY, the highest growth rate since October 2012. However, with the growth slowdown in the region and the sustainability of the reflation a question, there could be little impetus for the central bank to act upon the higher prices.
Asian markets could receive little inspiration from the US markets, though the higher energy prices may help to sustain yesterday’s rise. The day ahead will receive Thailand’s January consumer confidence figures in addition to Singapore’s Purchasing Managers’ Index (PMI). The latter is expected to trend according to China’s manufacturing PMI, moderating slightly to 50.5. Bank of England will also announce their interest rate decision and publish their inflation report.
Yesterday: S&P 500 +0.03%; DJIA +0.14%; DAX +1.08%; FTSE +0.12%