23-4-2020 11:50:4023-4-2020 11:45:51Asia equity markets posit to open sharply lower after a volatile session from the US last night. All three US indices tumbled over 3% as virus concerns heightened. Industrials (-4.92%), financials (-4.88%), consumer discretionary (-3.76%) and communications (-3.70%) were among the worst performing sectors.
Defensive sectors such as utilities (-1.63%), consumer staples (-1.99%), real estate (-2.36%) and healthcare (-2.39%) declined less than the benchmark index due to their resilient nature.
‘Risk off’ is perhaps the theme today, with Nikkei 225 and KOSPI trading 1.3% lower in the early morning. Futures market indicates a lower opening for Hang Seng and China A50 index as well.
Safe-havens, namely gold, yen, and treasuries regained favour, whereas the dollar index extended its slump. This reflects the market’s concern over the potential impact of the coronavirus on the US economy in the weeks to come.
Today’s US non-farm payrolls will be a key catalyst for forex and equity trading tonight as traders are watching it for clues of any impact on the jobs market in February. Market expects some 175,000 new jobs added in February, a reasonable revision down from January’s actual reading of 225,000. A much worse-than-expected US non-farm payrolls data will reinforce the Fed’s dovish stance and point to more aggressive rate cuts down the road; and thus weakening the US dollar. US non-farm payrolls will be released at 9.30pm (Singapore time) on Friday.
While US and European markets are in turmoil, Asia seems to be more resilient this week. The China A-Share market outperformed global peers, boosted by fiscal stimulus and a largely contained virus situation. A relatively cheap valuation also helped to cushion the downside for Asia.
OPEC plans to cut output by 1.5m barrels a day, but Russia remains a big wild card. Brent crude oil fell to $50.4 overnight, and little changed this morning. The structural issue is a sharp fall in global energy demand, as more countries start to implement travel bans and corporates freeze flights. Brent oil price has broken down a key support level at $51 and is about to test the next support at $50.
Singapore’s STI is drifting down along with the rest of Asia, down nearly 1% in early trading hour. Banks and offshore sector remains the biggest drag of the benchmark, due to the Fed rate cut impact and falling oil prices. REITs also suffer profit taking, as traders tend to cash-out before tonight’s US non-farm payrolls.
US non-farm payrolls chart
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