S&P 500 index fell nearly one percent overnight, dragged by mixed earnings results as well as rising trade uncertainties.

Mr Trump scrapped the plan to meet Chinese leader Xi Jinping to strike a trade deal at the end of this month, re-igniting fear that the two countries are probably facing difficulties to reach an agreement on key issues surrounding technology and intellectual properties. Last week’s trade talks in Washington were reported to have yielded ‘progress’ but little details were revealed.

Meanwhile, the US is exerting pressure to her allies worldwide to stop using Huawei in building their 5G network on securities ground. This move could further dampen the trade relationship between US and China. If no trade deal is struck before the 1 March deadline, the president promised to raise tariffs on $200 billion Chinese imports from current 10% to 25%.

About 55% of the S&P 500 components have announced earnings and around 68% of them beat expectations – a lacklustre result compared to 70-80% upbeat earnings in the past few quarters. Nearly half of those companies have highlighted risk of slowdown in China as the economic growth came down to decades low and consumer demand is fatigue.

Technically, the S&P 500 index has come back to test its 10-Day SMA at around 2,700 area, breaking down below this level will kick off a technical pullback towards the next support level at around 2,628 area.

Sentiment turns sour, and Asian markets opened broadly lower this morning. Brent crude oil price retraced 2.5% to US$ 61.7 area, whereas gold price rebounded 0.5% to US$1,310 area – a typical combination of ‘risk-off’ setup.

Singapore market had a decent rally on Thursday but may face some selling pressure today. With year-to-date gain of 4.6%, the benchmark STI index is still lagging behind regional peers such as Hang Seng Index and China’s CSI 300 index. A ‘catch-up’ rally was driven by improved risk appetite, fading recession fear following strong US jobs data and a ‘patient’ Federal Reserve. The sustainability of this rally is dependent on the upcoming peak earnings season, the outlook of US-China trade talks and crude oil prices.

S&P 500 Index

 

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