Overnight U.S. market recap
Following the U.S. ((0|ADP}} employment report miss, U.S. Treasury yields fell; the yen soared, The S&P 500 suffered its first back-to-back drops of more than 1% this year, Crude futures tanked to their weakest levels in a month while gold prices rallied back to the critical $ 1500 level.
Asia Market update
Its been a rough start for Asia stocks after the World Trade Organization (WTO) has approved the U.S. to impose tariffs on $7.5 billion of European goods.
Already reeling for the ruinous run of global financial data.
Asian markets are now left dealing with the damaging effect of trade wars on three front. The U.S.-China, U.S.-EU and Korea and Japan.With the global economic data continuing to deteriorate this new trade war front will stoke the recessionary fears to no end.
The fact the U.S. didn't bother even to review the damaging economic implications suggests the U.S. administration is content to wantonly escalate their brand of scorched-earth trade policies and hardly indicates that President Trump is in a jovial or negotiating mood.
Even in light of the sentiment damaging weaker run of U.S. economic data, there is not backing off while perhaps believing that his election ambitions lie in an active trade war charge rather than setting a perimeter defensive line.
Personally given the timing and with the market already shifting to recessionary doom and gloom, I don’t think this has been well-thought-out at all which is pretty typical of Trump administration trade initiatives.
Malaysia
The ringgit remains glued to 4.19, but this belies the fact the local markets have a lot to digest.
A GST proposal by a domestic think tank is garnering lots of press.
The Dr M vs Anwar succession talk move on in events.
However, with the 2020 Budget getting delivered on Oct 11, this is now being viewed as the next significant catalyst with is likely keeping investors caution on local bonds, equities and currency.
India
The RBI's rate decision is due on Friday. Market consensus is for a 25bp rate cut to 5.15%.
However, its all about the forward guidance. Trader will be looking for any signs the RBI is taking solace recent corporate tax cuts which may lessen the likelihood of additions near term easing.
Indonesia
Indonesian President Jokowi is reportedly prioritising labour market reform, which may result in lighter severance payments.
Jokowi also appears to be reiterating his prior views to adjust investment rules and corporate taxes. This move could be viewed positively for Indo bonds and the IDR.
Thailand
The weakness in the Thai market is set to continue as risk-off sentiment continues to dampen investor appetite. Institutional investors are likely sellers in this toxic environment with local funds outflows accelerate.
The currency reaction has been mute possible due to a stable Yuan but focuses now shifts to the essential STI 1600 level
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Why the bounce in oil? Don’t read too much into early price action, especially in Asia possibly due to the China holiday effect
A reason why oil prices may be bouncing higher over and beyond the usual " profit-taking " diatribe.
- Also, the MBS " put/straddle" that infers that Saudi Arabia will continue to offer support and resistance at oil price extremes provides a bit of a backstop.
However, overall the market remains pretty toxic suggesting that until further notice oil traders could be better sellers on rallies.