Asian equities could trade mixed after a choppy session in the US, where the S&P500 and Nasdaq closed lower, with the tech sector leading losses after disappointing earnings reports from Microsoft and Alphabet. Tech companies are struggling with rising operational costs, high-interest rates affecting margins and are starting to feel the pressure from an economic slowdown, dragging worrying outlook for earnings guidance.
Although, sentiment toward Chinese stocks improved on Wall Street and could keep supporting local single equity markets. The Nasdaq Golden Dragon China Index rose 7.2% during the US session. The risk-on flow into Chinese stocks came after oversold conditions, with retail and institutional traders buying the dips as Beijing’s promise to sustain its financial markets. It is worth keeping an eye on top performers such as Alibaba, JD.com, Pinduoduo and Lufax Holding. For the session ahead, it is also worth watching the USD as FX has been leading price action recently due to month-end activity and US Treasury yields volatility. A weaker dollar in the session could lift risky assets amid portfolio rebalancing flows. Also, traders are leaning towards a Fed pivot, where the majority expect a less aggressive tightening cycle following a 75bps rate hike at the forthcoming Fed meeting.
