Asia market morning update - concerns brewing

The smattering of releases overnight had failed to inspire markets. The private ADP employment report, that saw an addition of 183,000 jobs, had been a strong reading albeit slightly missing the 189,000 consensus. Alongside former New York Fed president William Dudley’s reminder that the Fed may not be done raising rates, worries appear to have set in once again on rate hikes. It probably had not helped with the Fed’s beige book note on the slowing down of economic activity, citing the effect of the government shutdown into the start of the year. This comes at the heels of the earlier report highlighting tariffs implications, a double whammy for the US. Altogether, one can say it had not been a pretty picture again. As far as US futures are suggesting, markets remain downtrodden with the momentum tipping over across the likes of the Dow and the S&P 500 index.

On commodities, crude oil can be seen coming under pressure with the latest build in crude inventory. Not a surprise seeing the likes of WTI futures down a tad to $56.20 this morning. Post the API report, the EIA had substantiated with the confirmation of a massive build of 7.1 million barrels last week. The strengthening greenback likely one to weigh as well. This saw the energy sector on the S&P 500 index sinking to one of the worst performers’ post at -1.28% on Wednesday. Watch next week’s OPEC monthly report and any further trade news to bolster prices that had largely flatlined since. Resistance at the $58 handle, one to cross to open up room on the upside.

Muted movements are expected to sustain for Asia markets amid the lack of inspiring leads. As noted above, the pressure stemming through from Wall Street’s concerns overnight coupled with the miss in Australia’s Q4 GDP yesterday would be reasons for the region to stay cautious. Early release out of Australia had been mixed as retail sales disappointed while trade performed better than previous. Meanwhile, headlines have highlighted President Donald Trump’s eagerness to see a trade deal with China to clock as a win for the markets as well had probably not been a surprise, although this could mean the sooner arrival of a deal. Watch the likes of China’s foreign reserves reading amid the FX focus, ahead of the European Central Bank meeting today.

Note for the local Singapore market, a bearish divergence can be seen apparent here with prices idling in consolidation. Watch for which end of the current zone prices would attempt though no surprise that this may well remain the case until further breakthroughs in trade negotiations had been brokered.

Yesterday: S&P 500 -0.65%; DJIA -0.52%; DAX -0.28%; FTSE +0.17%