Asian markets could drive mixed with a positive tilt after a rally in the US market for a second day amid further stability in the banking names as a two-day meeting of major bank CEOs is underway in Washington, with a discussion of First Republic on the agenda with the bank examining how it can downsize if its attempts to raise new capital fail. Traders could be eying the USD and US Treasuries ahead of today’s FOMC meeting, which is expected to have significant implications for the global markets after recent volatility caused by the banking sector and huge repricing of this year’s Fed rates path.
The current money market pricing and narrative are that the Fed will raise rates by 25bps, although there are concerns about the potential impact on financial stability, particularly for regional banks. The meeting outcome will likely have implications for the USD, which has weakened as risk appetite has improved this week. Additionally, the focus on the FOMC meeting will likely overshadow other economic data releases scheduled for today.
On the geopolitical front, the ongoing talks between Chinese President Xi and Russian President Putin are also likely to have implications for the Chinese market, particularly concerning bilateral trade ties and the use of local currencies in trade settlements. The other focus point is expected to be Xi’s conversation with Ukraine’s President Zelensky. However, moves to end the Ukraine war are expected to gain little traction, given the respective starting points of Ukraine and Russia.
