Asia equity markets start the session with no single direction as the tentative mood in global financial markets persists, heading to this week’s risk events, with trader’s sentiment also hindered by remaining China-related frictions and following a breakdown of US infrastructure talks. On the radar, a theme that could slightly weigh on the risk sentiment is a COVID-19 outbreak in southern China that was reportedly curbing some activity in the country’s largest ports that further disrupted international trade and could lift export prices. Worth noting that China has recently stated that it is paying attention to commodity prices and would act if there is any signal of hoarding and market manipulation. Nonetheless, on Wall Street, commodities moved higher, particularly WTI, which rose above USD 70/bbl for the first time since October 2018, as the reopening bets are still on fire.
Participants went hunting for defensive plays, and there was some positioning for the US Consumer Price Index on Thursday. Global participants might be holding their risk bets for now following the weaker-than-expected May US nonfarm payrolls report. The attention now has been turning to the June FOMC meeting next week. As last’s meeting Minutes and some Fed speakers pointed, the Committee might start discussing the bond tapering. But it is unlikely that QE tapering would begin over the near term as the major US job market indicator remains over 7 mln jobs short of its pre-pandemic highs. For the session ahead, it is worth paying close attention to the momentum higher in reopening stock like cruise liners, restaurants, and airlines, with recent stories of some countries planning to ease travel restrictions in the coming weeks. Today, some news reports stated that South Korea is to permit group tours abroad for fully vaccinated citizens as soon as next month and Australia’s Victoria state acting Premier is set to ease lockdown measures in Melbourne.
