Following strong earnings from JP Morgan and Wells Fargo on Friday that beat market expectations, Asian markets have followed the lead of the major US indices and traded higher. The Nikkei225 closed 298 points higher whilst the Hang Seng is currently 33 points in the green. Notably though both markets are trading well off their intra-day highs, most notably the Hang Seng.
Whilst there have been positive comments from both sides of the trade tariff dispute, the lack of a concrete deal is still a drag on the market. Until we see sight of an agreement the trade talks are keeping a ceiling on upward movement in the markets.
Economic data and earnings will be the catalyst to drive the markets in this holiday shortened week. Retail Sales and private Sector PMI numbers on Thursday are those most likely to offer direction but with a steady stream of earnings results to dissect, the markets will not be without fuel. The key earnings results are as follows
Citigroup – Monday
Goldman Sachs – Monday
Bank of America – Tuesday
Netflix – Tuesday
Morgan Stanley – Wednesday
American Express – Thursday
As the financials have already kicked off with strong earnings, this will be expected to continue. Any divergence and recent gains will be reversed, quickly.
With the UK parliament in recess until the 23rd April and a shortened week for some participants, sterling should see a tightened trading range. Whilst I still think that the upside potential far outweighs the downside risk for sterling it may not be the trade of choice this week. As the Euro approaches 1.1333, we see an excellent selling opportunity.