Early indications point to a “glass half-full” trading day for Asia Pacific markets. The weakening US dollar improves the outlook for regional currencies and by extrapolation, local shares. Futures markets indicate positive opening moves for Hong Kong, Singapore, mainland China and Australia. Nikkei futures are the exception to the rule.
Traders anticipate the US Federal Reserve will maintain a highly accommodative stance at its meeting on Wednesday night. The consensus is for no change to current settings, but the Fed board is expected to emphasis its “whatever it takes” approach. This factor, combined with rising Sino tension and accelerating Covid-19 infection rates, are weighing on the US dollar. Better than expected German business confidence data released overnight spurred the Euro / US dollar cross to 18 month highs.
Commodity markets are sending mixed signals. Base metals and crude oil markets moved higher in growth positive trading. Gold remains near 11 year highs, overshadowing a spectacular 35%+ gain for silver over the last few weeks. This higher correlation between precious and base metals is unusual, and suggests one of these currents must reverse soon.
More than 50 of the US SPX 500m stocks reported overnight. Although outperformers are still the majority, around 10 stock reported significant earnings misses. Hasbro fell by around 8% on lower sales due to store shutdowns globally. JnJ Snackfoods rose around 1% despite a disappointing profit number driven by a 34% decline in sales. Investors are looking forward to reports from Apple, Amazon, Alphabet and Facebook over the rest of this week.
