Asia morning update

The uplift in risk appetite had been the result of a single event, but this week carries with itself a multitude of factors to look out for.

The MSCI Asia Pacific index excluding Japan rose 0.61% on Monday, a significant gap from the changes seen in overnight markets. Over on Wall Street, the S&P 500 index and Dow Jones both came in with over 1.0% gains on the first day of the week. Prices had been lifted by the pick-up in risk sentiment following the French election and, to a smaller extent, positive earnings releases on Monday.

Meanwhile European bourses had been the true beneficiaries of this elimination of risk with the market’s favourite, centrist Emmanuel Macron, looking set to rise through in the second round of election. This had been perceived as a restoration of stability to the Euro. The rosy sentiment in the market could however be a short-term phenomenon. Certainly Europe is starting to look more attractive, but the fundamentals have not been altered with this political event.

Onshore markets in Australia and New Zealand are closed today for Anzac Day, making for lighter markets in the Asian session. The attention in the day, however, is expected to remain with the Chinese stock market. Steep dips were sighted on Monday from reactions towards the authorities’ intention to further reduce economic leverage in the country’s financial sector and this state of concern could remain despite improving outlook on growth.

Opening calls meanwhile finds moderate gains for the local Hong Kong and Singapore bourses, likely to continue basking in the glow of an uplift in risk appetite. Early movers including the KOSPI 200 and the Nikkei 225 had chalked up mild gains, the latter up 0.2% despite flat movements for USD/JPY.

The local Singapore market had treaded in a cautious tone on Monday despite the French election mood-lifter. The movements had perhaps best captured the situation we are currently in. Initial reaction towards the positive development in Europe gave way to the focus on other dormant risk in global markets. The second half of the week certainly brings President Donald Trump back to the stage as he presents both opportunities, in the form of his tax package, and risk, should his push for the border wall drive the US government to a shutdown. For the day ahead, the focus zooms in to US consumer confidence update and new home sales data while the Asian session sees only Hong Kong March trade data.

Yesterday: S&P 500 +1.08%; DJIA +1.05%; DAX +3.37%; FTSE +2.11%