Markets awaiting the G20

Rangebound trade?

To recap, we have seen Wall Street largely waffling last Friday, the likes of the Dow and the S&P 500 indices lacking strong impetus for another record close. The Trump administration’s further blacklisting of five Chinese tech companies ahead of the G20 meeting had perhaps not been the best piece of news for markets with sentiment hinging on US-China trade relations. That said, neither had things taken any significant step for the worse within the market.

Markets may well remain headline-driven in the countdown to the G20 meeting, though one should not be surprised that with the swivelling of information, indices across the US to Asia could see a more rangebound trade awaiting the conclusions at the end of this week. Evidently the G20 will be the biggest item on the table this week, whereby we have outlined the expectations for the meeting in our Asia week ahead. Watch for prices oscillating the current 2950 levels in the week on the S&P 500 index while also keeping an eye for Fed speakers into Tuesday and economic data.

Source: IG Charts

Upward bias for crude oil

Meanwhile concerns over geopolitical issues, in particular Iran, would keep the bias to the upside for crude oil prices and may provide a boost for energy stocks this week. Brent crude oil can be seen trading above $65 per barrel with the US set to impose new major sanctions on Iran on Monday that could risk further retaliation. Look to prices edging towards the $68.30 level should further heightening of tensions be seen. Although, the overarching driver for crude oil prices may remain with demand that would render the G20 meeting Trump-Xi meeting likewise of paramount importance for prices.

Source: IG Charts

Asia open

Amid the anticipation for the G20, Asia markets may likewise waffle along awaiting the conclusions. A mixed start to the week is expected with early movers including the ASX 200 and Nikkei 225 finding moderate losses moving into the session. Look to the rest of the region potentially taking a similar tone with the abovementioned blacklisting of Chinese tech companies by the US blanketing sentiment. One would note that with the expectation for Fed cuts and the uncertainty with regards to the G20 this week, USD/JPY (大口） can be seen hanging just above resistance at present. The CFTC commitment of traders’ report had notably registered a tick up in terms of yen bets, one to watch for further downsides here.

For the day ahead, a string of data is expected but perhaps little to sway from the current tone within markets. Singapore’s May core CPI is set to be little changed at 1.3% YoY while the headline CPI may decelerate slightly.

Source: IG Charts

Friday: S&P 500 -0.13%; DJIA -0.13%; DAX -0.13%; FTSE -0.23%