Asian stock markets could see a positive uptick after yesterday’s whirlwind of activities in both equity and bond markets. This comes in the wake of the U.S. Dollar facing notable headwinds due to unexpectedly weak service sector figures. Market sentiment was notably influenced by the Institute for Supply Management (ISM) services Purchasing Managers’ Index (PMI), which did not meet the anticipated benchmarks. This led to a reassessment of the broader economic landscape and potential shifts in the interest rate outlook. As a result, assets typically sensitive to broader economic shifts, such as Emerging Markets FX, bonds, and stocks, managed to recover from earlier setbacks as both U.S. yields and the Dollar retreated from their initial peaks.
The market dynamics were also shaped by unforeseen events abroad, notably in Taiwan, where a significant earthquake led to a temporary shutdown of operations at semiconductor leader TSMC. This development initially cast a shadow over semiconductor shares, but the wider market demonstrated resilience, effectively neutralizing these initial losses, evidenced by the Semiconductor ETF ending the day steady.
Looking ahead to the next trading session, with no major economic announcements on the horizon, market participants will likely be processing the latest U.S. data and eagerly awaiting comments from Federal Reserve officials in anticipation of Friday’s U.S. employment report. This forthcoming data is particularly significant as it might help stabilize the U.S. bond market, especially considering the 10-year Note yield was already hovering around the 4.40% level, exerting pressure on more volatile assets.
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© 2019 High Leverage FX - All Rights Reserved.