China data dump watch

Fed cut bets increases

Wall Street took a breather from the state of decline as the silver lining of Fed cut expectations stepped in to support markets. The overnight trigger for the step up in the expectations for Fed cuts to roll along had been the jobless claims surprise. The figure for the week ending 8 June had been seen at 222k against the market’s 215k consensus. US 10-year yields edged down upon the release back to sub-2.1% levels. Alongside the payrolls and CPI misses in the past couple of sessions, the expectations are high for the Fed to acknowledge the deteriorating economic conditions in next week’s meeting.

Notably, the move overnight had certainly been important for the likes of the S&P 500 and Dow indices, saving prices from once again submerging below their short-term 50-day moving averages and thus curbing the trend from tilting downwards once again. A series of US data remains to be seen into the Friday session, but the consolidation may well sustain until next week’s Fed meeting points us in a clearer direction.

Source: IG Charts

Oil supply risks?

Separately, the attention had no doubt been with energy stocks seeing the lift in crude oil prices with the oil tankers incident in the Persian Gulf yesterday. Brent crude can be seen reversing ahead of the key support level at around the $60 handle with this unexpected development. This was despite the initial bearish expectation with the OPEC’s paring of their demand outlook. Fears that the tensions at the Gulf may continue to choke supply could be a short-term support for prices though it appears that the Thursday reaction had been kept limited. The key item may perhaps remain with the OPEC meeting expected in due course that would play its part on the supply end amid the diminishing demand outlook.

Source: IG Charts

China’s industrial production, retail sales due Friday

Asia markets can be seen going into the Friday session mixed and some sense of cautiousness reflected in pockets of the market. As told above, the focus is set ahead to the Chinese data dump later in the day whereby May’s industrial production, retail sales and urban FAI will be seen. The current market consensus points to broadly stronger performance across the area. This may not be too much of a surprise if it materializes given the outperformance of May’s exports earlier in the week with interpretations of front-loading in light of the trade war. Any disappointments here, however would be one to dent market, but look more to the regional markets should a miss be seen for downsides. This is with the risk that mainland investors may view bad news as good news as the Chinese authorities commits to greater support for the economy in times of the on-going trade scuffle.

Yesterday: S&P 500 +0.41%; DJIA +0.39%; DAX +0.44%; FTSE +0.01%