Risk sentiment wavers for Asia markets
Between Brexit developments and the mixed bag of US earnings from Tuesday, Asia markets are set for a mixed session ahead.
Brexit can kicked down the road, again
The UK parliament had backed UK prime minister Boris Johnson’s latest Withdrawal Agreement bill but went on to vote against the short timeline provided, leaving the situation in a ‘limbo’ as we know and the expectation now for an extension to the Brexit deadline. In turn, we have seen the British pound shed some of its recent strength on the news and likewise affecting risk sentiment for markets. Although the rather ambitious timeline prior to the October 31 deadline had been rejected by the UK parliament, the bigger picture here remains one where we have finally seen the UK parliament amenable towards a way forward after more than two years caught in the Brexit process. Certainly, further twist and turns may be expected, whether this is a shorter extension to pass the deal or one that could amalgamate to the involvement of a general election, but the breakthrough so far with the withdrawal agreement may see to more upsides than down as the situation gets clearer. This is of course barring any sharper downturn in economic situation in light of the weak global backdrop.
GBP/USD seen a touch softer from the $1.30 handle trade earlier, but nevertheless finds positive momentum still and a reasonable adjustment out of the overbought situation. Strong resistance up ahead at the 200-week moving average at around $1.314 levels and immediate support were seen around $1.2750-$1.28.
Source: IG Charts
Asia open
Alongside Brexit, the relatively mixed set of earnings out of the US overnight provides poor leads for Asia markets going into the midweek session. Both the Dow and the S&P 500 index concluded Tuesday with moderate losses, seeing the likes of McDonald’s disappointing after the good start to the US earnings season thus far. As cautioned yesterday, a series of industrial names are expected with Boeing and Caterpillar due into the Wednesday US session that could cap the gains for the S&P 500 index that had picked up into October to eye a fresh all-time high.
The above said, energy stocks will be one to watch going into the Asia session with crude oil prices having picked up overnight on the back of OPEC and co.’s consideration to deepen cuts into next month, likely to aid with energy share prices here in Asia as well.
For the day ahead, couple of inflation readings out of Asia including the local Singapore CPI will be one to track, though the anticipation is likely to be with the long string of earnings out of US, ones to watch for equity market reactions.
Yesterday: S&P 500 -0.36%; DJIA -0.15%; DAX +0.05%; FTSE +0.68%
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