Quiet trading conditions which began in the Asian session due to the Lunar New Year holidays persisted throughout the day. Stock markets continued to move higher despite little in the way of fresh drivers over the course of the day’s trading sessions. The US indices had the best of it with the techs leading the way, Nasdaq finishing up 1.15% with the S&P and Dow both closing near 0.7% in the black. The dollar also continued on its recovery path since last weeks Fed meeting with the Dxy trading back up towards the 96.00 level. Brexit concerns are still weighing on the sterling although cable is still holding in above 1.3000 and EurGbp is still trading sub 0.8800. Commodities came under a bit of pressure with Oil, Gold, Aluminium and Copper all slipping over the course of the day.
Australia will provide the main focus for trading in the Asian session with the release of Retail Sales and Trade Balance data this morning followed by the RBA’s latest rate announcement. Retail Sales is expected to come out flat for the month on month number and the Trade Balance is set to come in at 2225mio. The RBA are once again firmly expected to keep rates on hold, however there will be significant interest in the statement with analysts looking closely for any change in stance especially given the significant changes in the market since we last heard from them. Commodity prices and the domestic labour market have held in well but several other factors could lead to a more dovish outlook from the board. The recent change of rhetoric from the Fed, continued declines in the domestic housing market and the subsequent increase in concern over household debt plus a substantial weakening in economic data both at home and abroad should all be weighing on the Reserve Bank. The Aussie dollar has been trading in a relatively tight range albeit with a bearish tone and we could see some big moves in the currency today, firstly on those key data releases and then on the RBA with the downside probably the most at risk in the current environment.
Looking at the rest of the days trading and the Lunar New Year holiday continues across the Asian region, we have a raft of Service PMI numbers due out across Europe and then the ISM Non-Manufacturing PMI data coming out of the US. Sentiment will continue to drive markets in addition to the aforementioned fundamentals and investors will also be looking closely at some of the worlds major companies as earnings season continues.