Monday, January 6, 2020

Rising political tensions see Asian stocks extend losses

Tags
  • Dollar
  • Gold
  • Euro
  • Stocks
  • Oil

Global markets slumped on Friday, after it was reported that a US airstrike killed Iranian Major-General Qassem Soleimani and Iraqi militia leader Abu Mahdi al-Muhandis. Wall Street ended last week lower as a result, as investors brace themselves for political tensions between the US and Iran to escalate.

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Friday’s losses in the global market led to weekly declines for most major indices except the Nasdaq, Hang Seng and Straits Times Index.

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The dollar slipped on Friday after the ISM Manufacturing PMI for December fell to 47.2, widely missing economists’ forecasts. But the greenback later recovered before US markets closed, as investors started to shift away from riskier assets.

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Meanwhile, demand for safe haven assets surged after the airstrike. Gold was up 1.51%, to 1552.20, almost reaching its six-year high of 1552.55. US treasuries spiked as well, with benchmark 10-year yields slipping 9bps to 1.79%.

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Oil was also up as well, making its biggest gain since the attack on the Saudi Aramco oil production facilities in September last year. Both Brent and WTI crude oil futures spiked on Friday as investors expect the US attack to lead to more instability in the Middle East, which could affect oil production and oil prices.

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Asian stocks look set to track US losses on Monday morning, with Nikkei, KOSPI and ASX200 opening 1.42%%, 0.99% and 0.01% lower. US equity futures were also down on Monday, with futures tracking the DJIA and S&P 500 0.37% lower. 

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This week, the US Institute for Supply Management’s (ISM) Non-Manufacturing Purchasing Managers’ Index (PMI) report for December will be released on Tuesday at 7pm (GMT +4), followed by the private sector employment report from Automatic Data Processing (ADP) on Wednesday at 5.15pm (GMT +4). On Friday, the Change in NonFarm Payrolls for December will be announced at 7.30pm (GMT +4).