HANG SENG, ASX 200, S&P 500 INDEX OUTLOOK:
- An unimaginative US Trading bout offer little ideas for the ASX 200 and Hang Seng indexes
- China export and import growth data might set a tine for European and Asia-Pacific trading
- The Treasury yields made a retreat for the 2nd day, the US Dollar pullback as the US earnings season starts.
ASX 200, CHINA TRADE BALANCE, S&P 500 INDEX, ASIA PACIFIC AT OPEN
The US equity indices were hovering near record peaks over the past 24 hours, underpinned by the hopes of a stimulus and gradual covid-19 rollout and the falling Treasury yields that helped reduce pressure on the risk assets. Trading shifted to a defensive side, with information technology (0.65%), real estate (+1.39%), and utilities (+1.94%) leading to more gains. On the other hand, energy (-0.79%), industrials (-0.86%), and cyclically linked materials (-1.06%) trailed.
The defensive US trading trends might set a very cautious pattern for the Asia pacific open. The strong US Dollar seemed to have added more downside pressure on the commodities as compared to the equities, gold, and crude oil prices lower and might impact the emerging markets currencies. The prices of crude oil retreated from the 11-month peaks as the profit-taking behavior began as Nasdaq 100 Pullback With Falling US Dollar.
S&P 500 Index Performance
The share prices of Tencent ADR (+2.92%) and Alibaba ADR (+4.3%) gained after the US regulators made a decision not to blacklist them on alleged ties with the Chinese military, allowing US traders to continue investing in the companies. The news might also underpin the Hang Seng index performance as Tencent and Alibaba account for about 9.6% and 4.0% index weight respectively.
On the other hand, when it comes to the macro front, traders eye the Chinese trade balance data that was due for release at 3:00GMT. The markets forecast growth in experts to have dropped to about 15% YoY from November by 21.1%. China’s export registered very strong growth in the 2nd half of last year, largely driven by vibrant overseas demand and coronavirus related disruptions in manufacturing activities around the globe. The Chinese import growth was expected to slightly edge up to about 5.7% YoY from at least 4.5% in the month prior.
Chinese data might set a trend for European and Asia Pacific markets, especially the Australian dollar and the ASX 200 index. A stronger than anticipated growth in exports might hint at the increased demand for energy products and base materials that tend to impact the Australian dollar. Essentially, the ASX 200 Index traded mildly lower during the open, mainly led by real estate (+0.95), and information technology (+2.65%) sectors. Energy (-1.31%), consumer discretionary (-1.28%) and materials (-1.28%) sectors lagged.
The US 4th Quarter earnings season will start this week, with Wells Fargo, Citigroup, and JP Morgan due for release on January 15.