Asian equities may see gains after positive trends on Wall Street following the market close, despite an initial dip triggered by stronger-than-expected U.S. quarterly PCE data. Semiconductor stocks spearheaded a rally, boosting indices just before significant earnings reports from tech giants like Microsoft and Alphabet. Notably, the Q1 Core U.S. PCE Prices data indicated potential inflationary pressures, prompting a more hawkish stance on Federal Reserve rate expectations. Today’s U.S. PCE data will be crucial for equities, as markets have turned bullish following recent tech earnings. The semiconductor sector also warrants attention, especially after Meta’s guidance was perceived as optimistic for firms involved in AI investments. Participants will be also digesting the US tech earnings and further information during the earnings conference calls.
Attention in the markets will soon turn to forthcoming economic indicators, such as Japanese CPI, U.S. Personal Income, the University of Michigan survey, and PCE data. Any miss on US PCE data could support equities due to its recent bullish sentiment. A hawkish reading would weigh more on bonds and FX, as the US Treasury curve would keep steepening and remove the rate cut pricing this year. Additionally, the Bank of Japan’s policy decision is imminent as the bank wraps up its two-day meeting. It is anticipated that the bank will maintain its current policy settings. The focus will likely be on any insights from the central bank’s statement regarding future policies, particularly its JGB purchasing program and its perspective on the recent depreciation of the yen. Concurrently, the bank will issue its Outlook Report, detailing Board Members’ updated median forecasts for Real GDP and Core CPI. Meanwhile, the USD/JPY pair has reached new peaks around 155.75, with today’s meeting being a key event for market watchers.
