Asia market morning update - Lighthizer's trade caution

This is expected to lead to another painfully muted start to the session for Asia, watching the impact as well from the weaker February PMI numbers off China.

Following the quiet start to the week, the leads coming through overnight had perhaps been of an extraordinary amount though failing to trigger strong moves in either direction. Congressional testimonies saw appearances from Fed chair Jerome Powell once again, US trade chief Robert Lighthizer and President Donald Trump’s ex-lawyer Michael Cohen for a dose of political noise in the span of one session.

Notably, trade representative Robert Lighthizer’s note of caution for a trade deal appears to have struck a chord with markets. While the March 1 tariffs deadline extension is prolonged ‘until further notice’ according to the trade chief with a formal notice to come, he had also warned of more works that needs to be done and the US will not accept a deal that only commits China to purchasing more goods. This had perhaps been an evidence of the pitfalls that remains ahead of reaching an agreement, contrasting President Donald Trump’s cheers and eagerness to see a deal being made. Alongside the political noise in the form of President Trump’s ex personal attorney Michael Cohen’s accusation, this saw to Wall Street ending moderately lower. The S&P 500 index and Dow both concluded in mild red, with the former retaining the struggle below the 2800 level.

Meanwhile, Fed chair Jerome Powell provided a little more than confirming the expected halt to the balance sheet run-off this year with more details to come very soon, potentially suggesting the incoming March meeting. Watch the slew of data releases today for a check on the economic situation, particularly US Q4 GDP, which could shake markets from the current flatline trade.

Asia markets look set to find another muted session to contend with, as told with the lack of fresh impetus despite the slew of Congressional updates overnight in the US. A couple of political updates will be watched for how they play into the risk sentiment including the Trump-Kim summit’s signing ceremony and the India-Pakistan skirmish in Asia.

Notably, this morning’s Chinese February PMI numbers arrived weaker across the board. The headline manufacturing PMI came in at 49.2 against the consensus and previous reading of 49.5. Non-manufacturing PMI declined as well to 54.3, bringing the composite to 52.4. Retaining grounds in contraction territory, the manufacturing index touched a 3-year low that could induce some pressure for markets. That said, the extend would be one to watch in light of the Chinese New Year interference during the period.

Yesterday: S&P 500 -0.05%; DJIA -0.28%; DAX -0.46%; FTSE -0.61%