Asia market morning update - growth concerns return

Fear rolling over itself?

Wall Street concluded Wednesday in moderate red, finding concerns that accompanied the poor data and yield curve inversion last week returning amid the lack of fresh leads. In particular, the fall in US 10-year treasury yields to the lowest level since December 2017 had been one hard to miss as the worries piled in. The closing in of January’s trade gap in the US and the resumption of US-China talks in Beijing on Thursday served to do little to support markets. Investors appeared to have zoomed in to the weak imports’ numbers instead, interpreting the reading as a slowdown in demand even though some of the tariffs distortions may have remained. Altogether, this had seen to the broad declines with all but the industrial sector on the comprehensive S&P 500 index falling. Whether this is the case remains one to be validated as we await further data into April.

With the heightening of growth concerns overnight returns the question as to whether we are paving the way for fear to roll over itself. To a large extent, the divergence in the global growth story had contributed to this phenomenon of yield curve inversion in the US, particularly as the demand for the 10-year government bonds in the likes of eurozone infect the US as well. This had likely been made more pronounced with the uncertainties on hand including the US-China trade impasse that could still be a significant global growth dampener. As far as the equities market is suggesting, US indices had largely thrived in a directionless pattern of late, oscillating the 2800 level for the S&P 500 index. The fear would be any form of trigger that could invoke panic that had not been seen in the market so far. Watch perhaps the US-China trade talks with more attentiveness than the backward looking Q4 GDP in the US.

Asia open

Asia markets are expected to go under once again with growth worries returning in the Wednesday US session. That said, as with the US, the moderate decline expected and likely into the end of the week on months’ end and caution ahead of China’s PMI numbers would remain ebbs and flows in the wider consolidation trend for the region. This can certainly be exemplified in the STI chart below. A lack of data updates is expected for the region into the Asia session. Look instead to the abovementioned US Q4 GDP and eurozone updates while keeping an eye for the US-China talks commencing in Beijing today.

Yesterday: S&P 500 -0.46%; DJIA -0.13%; DAX 0.00%; FTSE -0.03%