US equities were stronger FridayS&P 500 up 1.9%, recovering from declines the previous three days. Short covering was the day’s flavour as expectations for less aggressive Fed policy soared after Fed Waller, a notable hawk, joined the downshift camp and sent short sellers scurrying for the exits.

And importantly, US inflation continues to slink lower, paving the way for a more amenable Fed outlook.

That said, with debt ceiling issues roiling, a possible pushback from the Fed, high valuations, and companies representing 25% of the S&P 500 market cap reporting this week, investors’ top-side ambitions could be limited until we clear the swath of earnings report and FOMC hurdles.

Ultimately, those exorbitant US valuations might negatively impact index performance in the year ahead, even if fundamental catalysts emerge.

Although most Asia markets are closed for Chinese Lunar New Year celebrations, Japanese and Australian stocks are picking up on the better mood from US investors and on expectations of China’s economy returning to some semblance of a pre-pandemic trend, which will positively affect the local economies and boost regional corporate earnings.


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Asia is a better story and far more manageable for global investors to digest. Hence, we could see more eastbound inflow supporting ASEAN Stocks, Bonds and Foreign Exchange markets.

Oil is trading lower as investors try to gauge real-time consumption and mobility data trends against a likely meteoric rise in Covid cases post-LNY.

But with most analysts seeing the oil market coming into balance in Q2 and turning tight for the 2nd half of the year, those Brent crude $100 bbl has a good chance of actualizing; hence any dips to Brent $86-85 bbl should be eagerly consumed.

In the meantime, China’s consumer consumption and mobility trends are where the balance of risk sits post-Chinese Lunar New Year, especially if those expectations of a meteoric rise in Covid cases come to fruition.

Published by Stephen Innes, Managing Partner, SPI ASSET MANAGEMENT