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Positive start to huge week

Positive start to huge week

Asia Pacific markets are set for a growth positive start to trading after a rally in US shares and modest pressure on safe haven assets on Friday night. However a the market calendar suggests some caution ahead of interest rate decisions from major central banks, inflation, GDP and other economic data from leading nations, and the busiest week of the US company reporting season.

Currency markets are range bound ahead of meetings of the European Central Bank, the US Federal Reserve and the Bank of Japan. The lack of forex movement reflects expectations that all three will maintain current settings after the massive interventions introduced at out-of-cycle emergency meetings.

Japan, Australia, Italy, Germany, the US and France all release inflation data this week, in that order. Hong Kong and New Zealand trade numbers, Singapore industrial production, China PMIs, and Japanese retail sales provide regional highlights against a backdrop of European GDP reads and US flash national accounts. A larger than expected 14.4% drop in US durable goods orders on Friday night sounds a warning that investors are potentially facing hard evidence of virus related macro-economic damage.

The action starts today with Hong Kong trade numbers and the Bank of Japan’s meeting and policy decision.

Around 170 SPX 500 companies will report to shareholders this week. The first quarter contains less than one month of virus affected trading, but reports so far show a collective hit of around 18% to bottom lines. Investor reactions to further bad news are a key to the likely market outcomes. Tech giants are the main driver of index gains over the last three years, meaning Thursday’s reports from Amazon and Apple will receive particular attention.


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