Asia equities are trading on the backfoot following another failed relief rally on Wall Street amid continued hawkish price action ahead next week FOMC, worth mentioning that a 20% slump in Netflix shares post-earnings added to the selling. Also weighing on the sentiment was the global geopolitical tensions, with reports suggesting that the White House could send more defensive equipment to Ukraine. U.S. officials also said that Russia’s decision to invade, a potential SWIFT ban, is still on the table.
On the COVID front, traders will be evaluating the potential impact of Omicron in China as Premier Li noted that the economy faces new downward pressure and adds that they are to take more steps to boost demand and must curb the virus spread. Suppose the situation with the virus worsens in China. In that case, more supply chain disruptions could weigh global trade and potentially on price, pushing global inflation even higher, which would trigger another leg of hawkish policy from global central bankers. U.S. President Biden’s administration said it is on alert for Omicron disruptions in China. For the session ahead, participants will be seeking safe-havens and defensive plays, risk assets are taking a toll, all eyes on tech/crypto and long-duration names as selling could accelerate going into European trade.