Asian equities are trading relatively calm after a risk-off day on Wall Street with a hawkish Fed repricing and geopolitical tensions weighing on sentiment. Traders are starting to see a pick in Fed’s rate pricing, with markets seeing a faster tightening pace on interest rates although limited on balance sheet runoff, at least for now.
The major risk theme is Russian/Ukraine tensions. It is worth watching the energy, base, and precious metals as traders show short-term demand hedge on sensitive sectors against any escalation. The WTI traded at highs of USD 95.82 and Brent at USD 96.78, the highest level since September 2014. Participants could also bid for safe-haven currencies like JPY and CHF. Gold and U.S. Treasuries confirmed their status as a defensive play. On the data front, later in the session, traders will be eyeing U.K. and E.U. data as ECB and BOE showed some hawkish rhetoric. In the U.S., the Producer Price Index will focus on inflation pressures that are starting to dominate the political debate ahead of mid-term elections later this year, also on a potential peak in companies margins.
