Asian markets are poised to open lower on the first trading day of June as trade tensions escalate further between the US and China. Additionally, the US-India trade relationship is also now under pressure.
Beijing issued a new white paper on Sunday blaming the Trump administration for being fully responsible for the collapse of the trade talks. China has put Fedex under investigation, and will create a list of ‘unreliable entities’ against US companies as part of their retaliation measures.
In short, things are not moving in the right direction. ‘Risk off’ might continue to be the main theme in the weeks to come until the sky is clearer.
US equity markets tumbled last Friday, dragged by communication services (-2.04%), energy (-1.62%), Technology (-1.6%), financials (-1.48%) and industrials (-1.46%) while real estate (+0.77%) and utilities (+0.44%) rose.
The S&P 500 index has fallen into a bearish trend, with SuperTrend (10,3) and 10-Day SMA both sloping downwards. Based on Fibonacci Retracement, its immediate support levels can be found at 2,711 and then 2,636 points.
In the currency market, the Japanese yen – a perceived ‘safe haven’ – surged to a six month high of 108.16 before easing a bit to 108.29 this morning. Dollar index retraced for a second day to 97.58 as trade uncertainties dampened the confidence in the US economy. As a result of ‘risk off’ sentiment and a weaker dollar, gold prices surged to a two-month high of US$ 1,310.
For AUD traders, tomorrow might be a big day as markets widely expect the RBA to cut interest rates from 1.5% to 1.25% in an interest rate meeting at 12:30pm Singapore time. AUD/USD has fallen quite a bit since mid-April as markets tried to price-in this event in advance. Technically, AUD/USD has formed a higher-high in its 4-hour chart. Immediate resistance and support level can be found at 0.694 and 0.692 respectively.
Singapore’s Straits Times Index has fallen alongside with the rest of the world to 3,110 points. Sentiment remains weak due to trade uncertainties and weak manufacturing readings recently. STI’s immediate support level can be found at 3,100 points and then 3,000 points.
US SPX 500 - Cash
CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.