Asia market morning update - awaiting US tech earnings

Positivity priced in

The broad sense of positivity remains within markets, though it looks to have been mostly priced in at present. This had been evident with US indices largely wavering in the past couple of sessions as one awaits the slew of earnings, particularly tech earnings, this week. Overnight release of better-than-expected results from Halliburton did little to help the company’s share prices with rival Schlumberger’s earnings release casting a shadow on outlook, particularly for the key North America region. A mammoth number of companies will report in from Tuesday onwards including Twitter before the market open and several other industrial names that should keep investors peeled.

What will carry markets higher?

Assessing the current market situation, one would not have missed last week’s CFTC commitment of traders’ report showing net speculators’ bearish positions on the VIX rising for the third week to the highest level since October 2017. This extreme positioning reflects the vulnerabilities and potential for a near-term retracement. Likewise, as seen with the short-term market breath, the proportion of stocks carrying the market through with the recent rally had also dropped off in recent sessions. With the string of positive factors largely priced in at present, there requires the next trigger to bring the market forth and perhaps plenty of potential pitfalls if earnings, among others, do not match up to expectations here. One perhaps worth watching the VIX for.

Source: Refinitiv, CFTC Futures VIX CBOE Non-Commercial Net (Orange), VIX (Purple)

Crude rally

All the above said, one fresh development factored into Wall Street had been the surge in crude prices for energy stocks. The S&P 500’s energy sector had risen 2.05% in Monday’s session, leading the charge. As noted, over and above OPEC and co.’s curb in supply, the Trump administration’s surprise tightening of ban on Iranian oil has provided crude oil prices with further upside impetus. As seen in the WTI futures chart, the uptrend had been renewed with the swing past the $65 per barrel mark, placing the $66.50 resistance in view. That said, the entry into overbought territory alongside the bearish divergence that still persist warrants short-term caution here. The intraday boost to energy stocks in Asia would still prevail.

Asia open

Broad gains are set in-store for Asia markets at the open, though it will be one watching the likes of the Hong Kong market for reaction following the expectation for potentially lesser stimulus out of China. The local STI is expected to trade a little more listless following the evasion to safety yesterday, clearly with the wait for fresh leads in the sessions ahead as one watch corporate performance out of US. Coupled of data out in the Asia session including Singapore’s March inflation reading though these are not expected to be market moving events.

Yesterday: S&P 500 +0.10%; DJIA -0.18%; DAX +0.57% (last week); FTSE -0.15% (last week)