Asia morning update - cautiously awaiting conclusions

As seen with US markets, movements had been kept moderate in the US with a sense of anticipation carrying on. Data dampener did arrive in the form of the backdated December retail sales data which nosedived to the weakest reading since 2009 at -1.2% year-on-year. The key ‘control group’ which feeds into the GDP accounting likewise disappointed at -1.7%, altogether making for poor indications on growth as we await that reading into the end of February. That being said, seasonal factors and the government closure during the period had been listed as reasons motivating the market to overlook the item at present and instead focusing ahead to pending fresh updates from the trade talks. Assessing the market movements, across the moderate 0.27% and 0.41% drop on the S&P 500 Index and Dow respectively, the consolidation sustains without much of a semblance of a direction still.

Political noise meanwhile had been notable surrounding the border wall funding in the US, though the government shutdown appears to be one matter laid to rest for now as the aversion is expected. President Donald Trump is expected to sign the latest spending bill to keep the government open, putting to rest some of the worries over the reversion to a government shutdown that would have kept shaving away at economic growth. On the other hand, however, the President had announced his intention to declare a national emergency to garner funding for the border wall. This may well result in further political noise for the market with Democrat house speaker Nancy Pelosi indicating the likelihood of an ensuing legal challenge, a practise that had blocked previous executive orders.

For the markets, however, the worries had been kept to a minimum. The greenback held steady as seen via the USD index that remained around 97.0 levels this morning. Watch the US-China trade indications for fluctuations into the end of the week. Brexit issues likewise in a stalemate that maintains the risks to the downside for the likes of EUR/USD. This comes after GDP readings in zone afflicted markets to only a slight extent.

Captiousness prevailing for Asia marks ahead of the trade talks conclusions have weighed on early movers in the region. This morning’s release from Singapore also saw the revised Q4 GDP coming in lower than expected at 1.9% year-on-year, more to add to growth worries for the region.

Look to the data release in the day including China’s factory gate inflation movement after yesterday’s trade surprise. The key driver for markets may however remain with the trade talk conclusions. One should not be surprised if we should find a delay in the update as the US delegates reports back to the US. Nevertheless, the broad direction in which expectations are pointing is for the continued working relationship between the two countries towards a deal. The expected extension of the March 1 deadline for negotiations, if materialized, would also be taken in a positive light by markets.

Yesterday: S&P 500 -0.27%; DJIA -0.41%; DAX -0.69%; FTSE +0.09%