Asia equities begin the week on the front foot following Monday’s intraday mild rebound on Wall Street and after talks between Russia and Ukraine. They will hold another round of negotiations in the coming days. As month-end plays are out of the radar, participants’ focus will be fully on the geopolitical tensions, at least in the short term. Defensive and safe-haven demand should continue to grow as Russia faces strong resistance in Kyiv and an increased volume of sanctions being applied by western countries.
As the tensions rose, traders will be on the lookout for any sign of contagion effect in the military narrative as the US said a no-fly zone would be a step towards sending US troops to fight a war with Russia. It would be a significant escalator step. From the Russian side, they barred airlines from 36 countries, including European countries and Canada, from flying to Russia in retribution to moves from the other countries, and the Kremlin noted the latest counter-measures would not be the only response. Worth noting that the macro front is packed with important data releases, but markets should pay trim expectations and positioning around the data. Chinese manufacturing PMI data is waiting as EM players measure a possible new round of easing from Chinese officials to support the economy. Also, on the radar will be the March RBA meeting, where little adjustment to the RBA’s tone is expected.
