January was a month to celebrate
Facebook (NASDAQ:FB) and General Electric (NYSE:GE) are not names that bought a smile to investors faces in 2018. Both heavyweights found themselves unfriended and blocked last year but that all changed last night. Both recorded sparkling results and 10.0% plus rallies which saw them back in from the cold with so many new followers, they could have been accorded “influencer” status. It helped lift the S&P in the overnight session and making January a month to celebrate for investors. The U.S.-China trade talks made “substantial progress” according to U.S Trade Rep. Lighthizer. No deal as yet but President Trump will travel to China to meet President Xi in February. For the markets, which are clearly in “risk-on” mood, it was a case of no news is good news. Stocks markets, EM and bonds continue to bask in the warm Fed afterglow as do precious metals on a lower US dollar. All eyes now turn to the US Non-farm payrolls number this evening with the street predicting 165,000 jobs added. The fact that the Non-farms has not been mentioned at all among commentators this week until overnight says to me that we have negotiated most of the event risk for now and the Non-farms effect on the market will be short-term. In Asia today the data calendar is very light. What will be closely watched is the India Budget, especially significant ahead of mid-year elections. I won’t even begin to try and disseminate its nuances, as with all things India, that is better left to the experts. Suffice to say surprises within have the potential to cause volatility in India and spill over into regional EM to some degree.
FX
EM and G10 currencies continued to consolidate gains against the US dollar overnight in an otherwise sideways session. With the Lunar New Year starting Monday in Asia, I would expect the region to ease into the week’s end, rather than go out with a bang.
Stocks
We would expect Asian bourses to be in the green today now that most of the event risk of the week has passed and following the US indices strong overnight showing.
Gold
It is consolidating its gains overnight with stiff technical resistance in the 1350.00 to 1355.00 region. With most of Asia out next week for Lunar New Year, dips in gold should be well supported as local investors do some risk hedging.
Oil
WTI continues testing the 54.00 resistance with price action constructive. The freezing weather and Venezuela disruptions perhaps driving it. Brent, however, is mid-range between 60.00 and 63.00 and looks like staying there implying its WTI cousin’s bullish tone may be temporary.