Asia markets waffling along

Bullish bias remains for crude

Amid the uncertainty up ahead with the G20 Trump-Xi meeting, both the Dow and the S&P 500 index were seen flatlining and ending near neutral at the start of the week. Notably, the energy sector on the S&P 500 index slipped to become the worst performer with crude oil prices retracing some gains despite the latest sanctions on Iran by the US on Monday. Talks on the limited further sanctions that the US can take against Iran had likely cast some doubts on additional actions. That said, the upward bias here perhaps remains intact with the matter looking far from resolved. The potential for further retaliation certainly remains on the table and with prices falling to the support level, this would make for a good entry for bulls. The short-term event risks will however be with any surprise build-up in crude oil inventories.

Source: IG

Meanwhile on FX, the US dollar index, measured against six major currencies, continued to chart its course lower into Tuesday, underpinned by the sustained expectations for the greenback to soften. While the wait continues for the G20 event for geopolitics, the series of Fed speakers including Fed chair Jerome Powell and the only June FOMC dissenter Fed Bullard will be the highlight into Tuesday. Between the market and President Donald Trump, the pressure piles on for the data-driven Fed to lower rates and any details or added dovish comments could further weight on the greenback strength. This had likely been the expectations that the USD pairs had been trading on into the session, and further weakness should not be ruled out with the market’s ballooning conviction of a July Fed cut.

Source: IG

Asia open

The vacuum of fresh leads provides little for markets that remain sitting cautiously, reluctant to err on either side ahead of the G20 Trump-Xi meeting outcome. This could see to the relative rangebound mode sustaining into the Tuesday session. Looking at Asia markets, the relief in both the Fed move and trade talks hopes had altogether enabled markets to retrace much of their May losses. Any disappointment coming from the G20, however, remain one to puncture prices, albeit in a more measured manner with supportive central banks and expectations for Chinese policy reactions.

For the local STI, prices may waffle along the 3320 level into the week with immediate support at 3278 and resistance seen up ahead at the 3400 handle.

Source: IG

Yesterday: S&P 500 -0.17%; DJIA +0.03%; DAX -0.53%; FTSE +0.12%