Asia market morning update - mixed earnings update

3M disappoints

Between the beats from Facebook and Microsoft and the drag from 3M, it had truly been a mixed bag of earnings rendering the S&P 500 index little changed in the session. In particular, having fallen by the most since October 1987’s Black Friday, 3M certainly joins Caterpillar in being a drag on industrials and the Dow Jones industrial index alike. It is nevertheless worth noting that as with Caterpillar, the softer 2019 guidance had been remarked to not be indicative of wider problems with the economy, which is perhaps one redeeming factor here. Still, this weak performance looks to be a drag for Asia markets moving into the Friday session.

Unabating US dollar strength

Meanwhile as noted with the surge in the US dollar strength on Thursday, there appears to be no abating of the gains here for the greenback. The greenback, for one, had gone on to notch an almost 2-year high, trading firmly above the 98.0 level overnight and counting the data a surprise in the form of the durable goods figures one to aid. The attention sets ahead to the Q1 GDP in the Friday US session for confirmation of any upsides to be seen, which is also the bias here, to keep the uptrend going. Any disappointment likewise would be a bane here with the optimism having been broadly priced in.

JPY ahead of the golden week

One currency pair perhaps worth noting for this Friday session would be the USD/JPY (大口）. Following the expected announcement from the Bank of Japan on monetary policy on Thursday, USD/JPY was seen budging little. One takeaway from the meeting had been the timeline set for stationary rates until the spring of 2020, though arguably there are likely few convinced of a move prior. The key in today’s session would however be the golden week lying ahead for Japan coupled with the series of Japan releases. March industrial output as it is had disappointed though yielding little changes for the $111.50 USD/JPY trade. It will be watching for any last-minute moves before the long break with USD/JPY inching lower since the session prior to the 200-DMA. One to watch.

Asia open and week ahead

Asia markets are set to commence the Friday session mixed, with pockets of pressure stemming from the dismal overnight performance of US markets and the sustained US dollar pressure. As told above, the end of the week remains in watch of US releases with US Q1 GDP due and the string of earnings continuing through to next week. Apple, one pertinent name for Asia producers would be amongst another long list of earnings releases in the coming week for the market to watch.

Meanwhile, geopolitics would also return into the spotlight as US-China trade talks continue midweek. This will be set against the backdrop of the absence of Japan through the week and China away midweek onwards, potentially making for thinner volume. Most Asia economies would also take Wednesday off for the labour day holiday. On monetary policy, the Federal Open Market Committee (FOMC) meeting may, however, yield little excitement with no changes in tone expected from the committee.

For the local Singapore market, March industrial production and Q1 employment numbers should keep the local market attuned, but the region could also be positioning ahead for the Q1 bank earnings as DBS is set to release their results before the market open on Monday morning. Lukewarm expectations had been pencilled in for the local banks with DBS being mostly favoured amongst the three rendering it one to watch as we head into the week ahead.