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APAC Morning Call 16.04.18

Snapshot of major markets and macro summary 

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On Saturday, news broke that France, the United States, and Britain conducted “precision strikes” on Syria. The heightening of new geopolitical developments may cloud the data releases from the week ahead that included RBA minutes, Federal Reserve speakers, Bank of Canada’s Rate announcement, and a heavy Chinese economic calendar that includes GDP, industrial production, retail sales and fixed asset data.  The difficulty for markets tends not to be pricing risk, but rather not knowing when risk needs to be priced as geopolitical concerns put traders and investors at the whim of various headlines, and not the economic calendar where we’re more comfortable.

 

S&P/ASX ends week higher, set for uncertainty on Monday: The headline Australian stock index finished the week higher at 5829.10, good for a gain of +0.7% over the course of the week. Receding concerns over a US military strike in Syria proved to be a positive driver for global equities, but the catalyst appears to be short-lived: the US, UK, and France carried out airstrikes against Damascus early-Saturday morning in Syria. Now, with the prospect of geopolitical tensions ratcheting higher between the US and Russia, volatility in global financial markets seems likely to reappear and drag down the S&P/ASX at the start of the week.

 

AUD/USD posts a strong week, eyes local data: The Australian Dollar posted a lofty gain of +1.15% versus the US Dollar, its first weekly gain since the week of March 5. Much of the gains were due to a general improvement in risk sentiment, with both the S&P/ASX and Wall Street indices trading higher last week. But with the prospect for the downside to emerge after the US, UK, and France launched military strikes against Syria over the week, the Australian Dollar may be dragged down as investors shift to a more cautious mood. Local data should draw focus as well, with the RBA meeting minutes due out on Tuesday and the March employment report due out on Thursday. Expectations call for a gain of +20K jobs and for the unemployment rate to drop from 5.6% to 5.5%, which may prove to be a buoy for the Australian Dollar in more turbulent conditions emanating from abroad.



Economic releases

 

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