Asian equities trade with a positive footing following Wall Street‘s resilient start to the week, which saw a recovery from the previous week’s declines, largely driven by substantial gains in the technology sector. Notably, Nvidia shares and semiconductor stocks experienced a robust rebound, enhancing the performance of technology-centric indices. This uptick in key sectors could potentially stimulate positive momentum in Asian markets, which had previously faced a downturn in the semiconductor sector as demand in the first quarter has been lower than expected.
As a tailwind for risk, the unwinding of hedges against geopolitical risks in the Middle East is noteworthy, as evidenced by decreasing prices of gold and oil amidst a shift from safe-haven assets to more risk-prone investments. The Japanese yen has notably weakened, reaching a 34-year low against the dollar, amid expectations of no imminent policy changes from the Bank of Japan. Market participants are also closely monitoring key U.S. economic indicators such as GDP and Personal Consumption Expenditures (PCE) data, essential for assessing economic health and consumer spending patterns. These indicators will be released ahead of the Federal Reserve’s rate decision next week, which occurs during a blackout period where the Fed limits public commentary before policy announcements. As such, the upcoming week is poised to be pivotal, with U.S. earnings releases potentially influencing the trajectory for tech and semiconductor sectors following last week’s sell-off.
