Sentiment recovers on Brexit hope | CMC Markets Daily Commentary
Sterling rebounded strongly overnight as Theresa May managed to get an improved deal with the EU ahead of tonight’s Brexit vote in the British parliament. The likelihood of this revised deal to be passed is now increasing, although great uncertainties remain. Tomorrow morning will be a ‘decisive moment’ for GBP, and a constructive move will likely send the currency higher. GBP/USD is now traded at 1.322 area, with immediate support and resistance level at 1.305 and 1.335 respectively.
US equities surged overnight, while US dollar pared gain for a second day due to positive development in Brexit deal and better-than-expected February Retail Sales readings. Weak February non-farm payroll reading gives the Fed more reason to stay put, and thus is equity-positive and dollar-negative.
The Nasdaq Index jumped 2% on Monday, underpinning weakness in the aviation sector following a fatal crash of Boeing 737 Max 8 jet in Ethiopia on Sunday. Boeing Company’s share price is under pressure as two major accidents happened on its 737 Max 8 model within six months, causing safety doubts on the new model.
The S&P 500 index attempted to re-challenge a key resistance level at 2,800 points, fuelled by trade optimism and accommodative monetary environment. Yesterday’s rally could mark as the end of the recent technical correction, and an attempt to break out above 2,800 will open room for further upside towards the 2,935 area.
Asian equities opened broadly higher this morning, boosted by Brexit hope and strong US equity sentiment overnight. Singapore’s Straits Times Index soared 26 points, or 0.8% at open, led by telco, technology, industrial and real estate sectors. 3,200 was proven to be a strong support level for the STI and a rebound from here will likely lead to further upside towards the 3,280 area.
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