Asian markets posit to open mildly higher following a strong US session, which was lifted by trade optimism, decent earnings and rate cut expectations.
The S&P 500 index closed at a record high of 3,039 points, breaking out a key resistance level of 3,024 with little hesitation. Safe-havens retraced broadly, from gold to JPY and treasuries.
Are we being too optimistic? Less than a month ago, trade talks were on the verge of collapsing and recession risk was looming in the global economy. The memories are still fresh but fading faster than they were formed. This is perhaps largely attributed to the restarting of asset purchases by central banks and lower interest rates. Ample liquidity helped to underpin weakness in fundamentals and this is the world we are now living in.
Nonetheless, the FOMC meeting this week and the ongoing trade talk between US and China serve as the two biggest risk factors if either fails to meet expectations.
Sector wise, information technology (+1.26%), communication (+1.17%) and healthcare (+1.04%) were leading the gains, whereas utilities (-1.31%), real estate (-1.08%) and energy (-0.62%) were trailing.
Similar pattern may be found in the Asian session today, especially in block chain technology related companies. Falling crude oil prices are likely to dampen the performance of energy and offshore & marine sectors.
Currency wise, GBP/USD rebounded from a key support level of 1.282 to 1.286 overnight as the official postponing of the Brexit deadline to end January 2020 eliminated the risk of an immediate no-deal scenario, although uncertainties remain over Mr Johnson’s call for an election.
Singapore market is likely to have a ‘catch up’ rally when trading resumes today. With positive sentiment from the US trading session, the Straits Times Index may attempt to stand above 3,200 points this week. Technology, real estates, financial and consumer sectors are set to lead the gain today.
Worth taking note that Hong Kong related companies seemed to have bottomed out recently as their valuation has been squeezed to a level enough to compensate the damage brought on by the protests. In Singapore, those include Jardine Strategic and Jardine Matheson.
S&P 500 Index
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