Asian equity bourses began the week with primarily cautious gains, and US equity futures marginally pulled back from record highs, with participants tentative ahead of further earning updates this week. Market participants are waiting for companies making comments about the future where the critical point is if they will upwardly revise some of their guidance for the next quarter. Nikkei 225 initially swung between gains and losses as pressure from FX inflows was offset by stronger than expected trade data – including the largest increase in exports since November 2017. Trade data figures over the coming months could be inflated by comparison with harsh lockdown data from 2020. The latest gains quickly beat forecasts, adding to positive hints that global trade will build momentum over this quarter.
In Wall Street, equities traded lower in a quiet session, particularly growth/tech sectors, amid a real-yield led sell-off in the US, with the VIX moving higher. FX and fixed-income traders are paying attention, at least in a cross-asset framework. The broad-based dollar sells with yield differentials back on the trader’s radar this week after a pullback to March’s low last week due to short covering and attractive bond’s price. Also, a broader now on towards a narrative of a more global recovery in the months ahead, as opposed to the US lonesome outperformance seen in recent data. European indices outperformed moderately today but were still lower for what it is worth. Investors are paying close attention to stocks amid Q1 earnings seasons picking up this week. Still, after economic better-than-expected data and positive earnings, market positioning shows some weakening ahead. For the coming weeks, worth keeping an eye on defensives sectors and safe haven assets like Gold, Yen, and US Treasuries due to solid demand by global players last week. The “sell on May and go away” theme is starting to pick up among investors.
