US equities finished marginally higher last night on the back of fresh achievements in the NAFTA trade talks between US and Mexico.

President Trump’s latest criticism on search engine Google, however, weighed on sentiments of technology shares. Google joined Facebook and Twitter in receiving the Oval Office warning of increasing regulation and scrutiny, the latter two has suffered from severe stock sell-off recently. Google’s parent company Alphabet was down 0.8% last night.

The S&P 500 Index is soaring to record high this week, touching 2,900 points for the first time in history last night. Technical indicators, however, are sending warning signals of potential correction. In its day chart, the index has reached the upper bound of an ascending channel, which is usually seen as a resistance level. Momentum Indicator RSI has also come to overbought zone of 70%, a level that suggests short term pull back is necessary. Its overall trend, however, remained upwards with both SuperTrend (10,3) and 10-Day SMA both sloped upwards.

Tonight’s US 2Q preliminary GDP data will be the focus. The earlier released advanced GDP reading came out at a growth rate of 4.1% – the fastest pace seen in four years – partly due to surging demand from Chinese importers before the tariffs kicked in. The second release of GDP reading tonight, is expected to show a modest revision down to 4.0%. Trade components-driven growth will be key tonight. If exports were playing an even more important role in elevating 2Q readings, market would expect this to be a one-off thing and will reduce expectation for 3Q growth as exports revert to normal level or even lower due to rising tariffs.

In Asia, China central bank continues to inject liquidity in the interbank lending market to boost construction and infrastructure projects to cushion the slowdown of economic activities. Shanghai Composite was hovering around 2,770 yesterday following strong rally on Monday. As liquidity eases and fiscal stimulus kicks in, the downside is limited at the current valuation.

In Singapore, the STI has tested key support level at 3,200 again and since rebounded. Strong US market sentiment and recovering in North Asian markets are likely to exert positive influence on local stock market.

US SPX 500 - Cash

Economic Calendar – US GDP Preliminary

By Margaret Yang in Singapore

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