Asia equity markets traded tentatively with a positive tilt as the major bourses in the region, and US equity futures lacked firm commitment heading into month-end. Market participants are gearing up for a risk-packed week, which entails the FOMC and BOJ decisions, President Biden’s American Jobs plan speech to Congress. On the data front, Chinese official PMIs are on the radar. If the numbers keep supporting a rebound in China’s growth this year, the reflation and reopening positioning in EMFX, bonds and equities might see a substantial upside in the week ahead.
On the radar are the JMMC/OPEC+ meetings and the peak of the US earnings season, with some 180 S&P 500 companies reporting with investor’s paying attention to the FAANG earnings. It is worth paying close attention to the tech companies that may set the tone in the market for the coming quarter. These can either be established leading names that perform massive returns or surprise winners that beat all market expectations and leave investors rushing to gain exposure. Traders are also continuing to fade tax hike threats, especially after weekend remarks from Democrat Senator Manchin, who said he was opposed to passing any major stimulus packages again through the reconciliation process, calling for targeted, bipartisan stimulus. Still, higher corporate taxes as the most considerable risks for US equities. Any reports indicating a chance that this theme can materialize and go into effect starting in 2022 could cause equity investors to take profits early.
