Asian equities could feel the tailwinds of the US stock market that surged yesterday after a strong tech rebound, particularly within the Nasdaq, propelling the major indices higher. This was in response to an array of positive data releases, giving some blows to the recession narrative and positioning, with yesterday’s data from the US all-surpassing predictions and boosting investors’ risk appetite. With the quarter-end on the radar, traders will be watching the bond and USD markets as flows from cash/bond could go to equities due to portfolio rebalancing. Recent price action suggests that the demand for the US dollar also declined in response to the risk-on mood in the stock markets.
Looking ahead, trader’s focus is gradually shifting towards Fed Chair Powell’s upcoming panel appearance at the ECB’s Sintra monetary policy conference, where Powell is anticipated to reiterate his stance on the appropriateness of further rate hikes. Traders will also monitor the PBoC’s yuan fix, which has been stronger than expected, amid reports suggesting state banks sell USD to bolster the Chinese currency. Month/quarter-end flows will be key for short-term price action.
