Asian equities could trade choppy after a mixed price action on Wall Street, with US Treasuries yields moving higher, pressuring long-duration stocks as tech and emerging market risk assets and currencies. For the session ahead, it is worth keeping a close eye on the USD and US yields as the cross-market correlation is strong, with tight liquidity due to the summer season, uncertainty around recent macroeconomic data and central bank tightening policy.
For the session ahead, the macro calendar is light, with no major updates on the radar. But renewed COVID concerns reapers as a headwind for risk after the Chinese city of Yiwu imposed a three-day city-wide lockdown with over 1200 cases reported. While on the trade front, hopes of China’s tariff reduction from the US have dulled after reports noted US President Biden is re-evaluating the potential moves. On the geopolitical front, participants are still watching the rhetoric from the China/Taiwan situation. A recent report is sending dovish signals to the theme as it highlights that President Xi sent a message to US President Biden saying that “now is no time for a crisis”, and Xi indicated Beijing had no intention of going to war.
