Asian equity markets began the week subdued. During the Asian session, US equity futures marginally traded below record levels, with traders now waiting for the US earnings season on Wednesday. This week’s key data releases, including Chinese trade tomorrow and GDP, Industrial Production and Retail Sales data on Friday, might help investors better understand the path of economic recovery and inflation expectations. Nikkei 225 fluctuated between gains and losses with price action at the whim of a firmer currency and after officials reimpose restrictions for Tokyo, Kyoto and Okinawa. Hang Seng and Shanghai Composite weakened ahead of key Chinese data releases and amid lingering tensions in the region. US Secretary of State Blinken noted the US is concerned about China’s aggressive actions against Taiwan and warned it could be a “serious mistake” for anyone to try to change the status quo by force.
In Wall Street, range-bound trade is an accurate description for most major asset classes on Monday with little catalysts to drive the sentiment. Traders anticipate a hot CPI print on Tuesday, which could trigger investors’ review on short-term inflation expectations. The week’s big theme is the start of the Q1 earnings season, with big banks starting to report on Wednesday. Goldman Sachs, JPMorgan and Wells Fargo will be reporting on Wednesday. Many desks expect profits for S&P 500 companies to show a 25% increase in earnings from 2020, according to data published by Refinitiv last week. That would be the most robust performance for the quarter since 2018.
Meanwhile, Fed’s Bullard, a voting member in 2022, caught some attention today after saying the Fed could consider QE tapering discussions once the US population is 75% vaccinated. There is another wave of Fed speech this week. However, most will likely stick to the script; traders keep a hawk’s eye for similar comments around specific remarks around Quantitative Easing Tapering.
