S&P 500 futures slid as much as 0.8% from last Friday’s closing as China’s 4Q economic growth reached decade low of 6.4%.
IMF warned weakness in global growth due to detrimental trade tariffs and financial market volatility, and the agency has revised global growth forecast to 3.5% this year from 3.7% seen in 2018. Lacking positive catalysts, Asian markets opened broadly lower on Tuesday as profit-taking activities kicked in. In Singapore, the Straits Times Index is facing resistance at around 3,225 points and its momentum indicators MACD and RSI have shown signs of overbought, suggesting a short-term pullback is possible.
China data suggests that there might be more consolidation ahead in 1H19 before China’s economy reaches a bottom, as the leading indicators – social finance and property sales are still falling. Retail sales and industrial output in December 2018 remained subdued but they have shown signs of stabilisation following a string of sharp decline in the previous months. Despite decline in auto sales, other items such as household electronics, furniture, clothing and food have all accelerated. Online retail, which surged 25.4% in 2018, remains the key driver of overall retail growth. Industrial output signals a mild rebound in construction activities, as recent fiscal and monetary stimulus start to feed into the economic activities.
Currency and commodity markets muted overnight as the US markets are closed on Monday for a public holiday. The US dollar index has paused its five-day rally and consolidated at around 96.0 area. Brent crude oil price is facing resistance at around US$63.7 area (38.2% Fibonacci retracement).
Today, investors will be eyeing the US existing home sales number, which is usually a leading indicator of the health of the housing market. Sellers of existing homes often spend part of the profits they make on consumption, thus kicking off positive ripple effects that boost economy. The consensus reading is 5.25 million for the month of December.
US Existing Home Sales
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