Strong rebound in global equities seen last Friday is gaining momentum during Asian opening hours this morning.

An upbeat US non-farm payrolls and strong wage growth led investors to believe that the recession risk is still far from us, and US economy is not as fragile as what people had expected. Meanwhile, Fed chair Powell’s dovish bias comments on interest rate policy and balance sheet normalisation further alleviated pressure over tightened liquidity.

US and China are having vice-ministerial trade negotiations in Beijing this Monday and Tuesday, in which they will likely conduct intensive discussion on narrowing trade surpluses, better intellectual property protection, cyber security, forced technology transfer and reviewing the progress of previously agreed items. Major decisions will probably wait until higher-level trade negotiators – China Vice-Premier Liu He and US Trade representative Robert Lighthizer – come to meet in the last-mile of negotiation.

Chinese central bank PBoC unexpectedly announced a one percent cut in Reserve Requirement Ratio (RRR), which will greatly boost banks’ ability to lend in an attempt to cushion a broad-based economic slowdown. The quantitative effect of this RRR cut is equivalent to releasing 1.5-trillion RMB worth of liquidity. China’s Prime Minister Li Keqiang also committed to fiscal stimulus in forms of tax and fee reduction on top of RRR cuts during a bank visit last Friday.

Risk-on rally led to running from perceived safe-havens – treasuries, gold and Yen were retracing back from their recent highs. Brent crude oil prices recovered to US$57.2 after hitting a 16-month low of US$50 two weeks ago. Rising oil prices signal a swing back in risk sentiment. Technically, crude oil prices have bounced from a key support level at US$50. Its short-term trend has turned bullish with 10-Day SMA sloped upwards, but SuperTrend (10,2) needs to flip to green in colour before a trend-reversing can be confirmed. Momentum indicator MACD has formed bullish crossover, suggesting more upside to come.

Crude Oil Brent - Cash

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