Asia market morning update - growth in question

IMF re-joins the growth caution chorus

“The expected rebound in global growth this year is precarious” according to IMF chief Christine Lagarde in her Tuesday speech ahead of spring meetings, also highlighting that while a ‘synchronized deceleration’ is the case, the IMF does not see a recession coming. This comes after the manufacturing reading surprises out of China and the US at the start of the week, placing somewhat of a dampener on markets as we go into the latter half of the week. The question on reconciliating the opposing sentiments of recovery and slowdown is one of timeline. Once again, while there may be little doubts that a slowdown in growth is widely expected, the March Chinese PMI and US ISM manufacturing figures had been ones to provide short-term relief, alluding to the fact that the situation is not as bad as the market perceives.

Checking on market movements, the S&P 500 index and the Dow did however find the abovementioned renewal of growth concerns capping gains, with the latter weighed as well with by Walgreens'’s profit warning. Despite coming in above the consensus, February durable goods did little to excite, falling into negative territory once again. US 10-year treasury yields edged down slightly overnight oscillating 2.47% at last check and closing the gap slightly with the 3-month.

From a technical perspective, prices had met resistance on both the US indices with a lack of impetus seen overnight following lowered volume. Look to the ADP employment today preluding Friday’s NFP for optimism to incite a breakout here as with any positive news out of US-China trade talks.

Brexit risks

The pound notably strengthened moderately overnight with heightened hopes that the UK would leave with some sort of a deal eventually. Prime Minister Theresa May is expected to seek a short extension from next Friday’s extended deadline while also work with Labour leader Jeremy Corbyn to agree on a plan for departing the EU. Here lie two potential pitfalls with the EU’s acceptance of another extension in question and the possibility of achieving a deal is uncertain given Labour’s clear opposition towards Brexit. The situation remains one of heightening no-deal Brexit possibility as we watch from afar. As far as the FX market is suggesting, things look little changed from end-February. EUR/GBP caught in this consolidation between 0.8535 and 0.8632 awaiting breakout.

Asia open – US-China update

A mixed but muted start is expected for Asia markets mid-week awaiting fresh impetus. As told above, the renewal of a sense of worsening growth outlook may be one to weigh through early morning update on US and China as it is drawing closer to a final agreement had led to an uptick for regional markets so far. Look to any further details out of this with markets across the Hong Kong HSI to the local STI testing resistance at present. China’s Caixin services PMI and US ADP will also be due in the day.

Yesterday: S&P 500 +0.00%; DJIA -0.30%; DAX +0.62%; FTSE +1.01%