Asia equities lacked firm direction with the region tentative following the somewhat mixed performance on Wall Street where the S&P 500 briefly approached to within 5 points of record highs, but the tech index Nasdaq lagged as long duration sensitive stocks were pressured by higher US Treasury yields. It is worth noting that Asia fixed-income markets, long duration stocks like tech, become sensitive to higher US yields, as it could drive the local risk premium higher.
On the Evergrande front, the PBOC Governor Yi Gang said it would avoid risk contagion from the Evergrande Group to other developers and the financial sector. It is a single case, and the spill over effect is generally controllable. China securities regulators will actively consider asking futures exchanges to increase transaction fees, restrict trading quotas, and the crackdown on speculation. For the session ahead, traders are going to be watching the US weekly jobless claims, Philly Fed, Existing home sales and, annotating any new rhetoric from Fed speakers ahead of a possible hawkish tilt from major Central Banks in the coming quarters.
