Asia morning update: Asian markets set for gains

Asian markets are nevertheless expected to round off the week with moderate gains, keeping to the consolidation tone.

Healthcare glow

The rally for healthcare stocks has been a theme cutting across the globe of late and Thursday’s Senate bill had shed further insights into a key driver for the sector. Year-to-date gains for the S&P 500 healthcare index had only been second to its IT sector, clocking a massive 17.0%, playing catch-up to the other outperforming sectors on the index.

For a sector that saw a tumultuous 2016, the concern surrounding the impact of an Obamacare repeal has certainly eased. Featuring a smaller-than-expected cut for Medicaid funding, this initial proposal continue to trend along the theme of a softer attitude taken by the new administration, blowing life into the sector. The bill nevertheless would still have to be passed and may find the route a difficult one with the opposition from even within the Republicans. For the day ahead, global markets could continue finding healthcare stocks an attractive sector.

Separately, the Federal Reserve’s first phase of stress tests yielded a pass for large US banks in the event of a deep recession and sparked discussions that the Trump administration could find a stronger case to peel back regulations. Financials stocks, however, had not felt any of the optimism, slipping 0.6% on both the S&P 500 index and the Dow.

Asia

Asia markets meanwhile may continue clocking broad gains on the last trading day of the week. Lifting markets on Friday could be the abovementioned rally in healthcare stocks in addition to the stabilisation of oil prices overnight. WTI futures edged back up to trade just below $43.00 per barrel (bbl) into Friday morning and could provide a reprieve for energy stocks in the region.

Notably, as Bloomberg reported, the attention of regulators have settled on large Chinese corporations and their overseas acquisitions. This comes at the heel of the recent MSCI A-share inclusion decision and could serve as another dampener for Chinese stock markets during the day. For the speculative Chinese market, this may be reasons to sell even as the domestic impact remain limited. Beyond the Chinese market, companies lined up in the pipeline may find a rough day ahead. This includes the likes of the local CWT Ltd. slated for takeover by HNA group. 

Watch list

Asia hours will find Singapore’s inflation update and industrial production data for both Singapore and Taiwan, key macro updates that would be watched. The key focus will likely shift to June’s flash PMI from Europe and the US today in addition to new home sales from the latter.

Yesterday: S&P 500 -0.05%; DJIA -0.06%; DAX +0.15%; FTSE -0.11%