Markets concerned about risks

Confidence sliding on Wall Street

Wall Street had both counts of the Fed and data to weigh on the equity market in the Tuesday session, though the moves had been kept measured ahead of the G20. Fed chair Jerome Powell in his comments on Tuesday had highlighted to the market about the greater downside risks to the US economy, inducing some selling. This is while the only dissenter in June’s FOMC, St. Louis Fed President James Bullard drove concerns on the potential lack of support from the Fed with the suggestion that a ‘50 basis points would be overdone’ while referring to the insurance cuts.

The suggestion from Fed Powell to better act ‘earlier than later’ nevertheless suggests that we could still be seeing the move come through in July even as no specific mentions were made. The move may however be at the 25-basis points level, lesser than what the market had been pricing in. Meanwhile US’ June consumer confidence fell to the lowest level seen since September 2017, a sharp drop to 121.5 from 134.1 in May, building on the evidence urging the Fed to act.

To a large extent, any further deterioration in trade relations is expected to guide expectations here so the focus remains up ahead with the G20. Prices on the S&P 500 index can be seen falling towards support as the retracement forms, one to watch 2900 level up ahead.

Source: IG Charts

Asia open

The gathering of concerns blows eastwards this morning, one to see Asia markets trade on a softer note. One bright spot for markets may perhaps be the report that the US is preparing to delay further tariffs on the additional $300 billion worth of Chinese imports with the Trump-Xi meeting up ahead. Although, this does not depart much from the current status quo and any breakdown in talks may still bring on further tariffs risks ahead thus keeping the enthusiasm at bay.

Look to the central bank meetings in New Zealand and Thailand in the day though no changes in monetary policy is expected from both. The meeting rhetoric will nevertheless be watched post the Fed’s formal shift while the rest of the region stick to the script of cautiousness. Singapore’s industrial production will also be due in the afternoon with a poorer performance eyed for May’s reading.

Yesterday: S&P 500 -0.95%; DJIA -0.67%; DAX -0.38%; FTSE +0.08%