Asia equity markets are trading mildly positive after another choppy trading session on Wall Street. Traders continue to lack firm commitment ahead of a Friday’s US jobs data. Meantime, “meme-stocks” (AMC, GME, KOSS, BBBY) saw massive gains, especially AMC, possibly catching some hedge funds offside if they were short, causing another squeeze by the so-called “Reddit Crowd” of retail traders. It is worth keeping an eye on as it could trigger another wave of deleveraging by hedge funds and other participants; if that hits the markets, investors will prefer to “fly to safety” in the short-term, as seen with the hedge fund’s short squeeze in January.
On the trade front, US and China relations may also find another bump in the road. Bloomberg reports suggested US President Joe Biden is to amend Former President Trump’s China blacklist, targeting key industries, such as defence and surveillance technology sectors. This move could create downside pressure on these sectors’ Chinese and US stock as the theme escalates. On the macro radar for this session, the trader’s eyes are on the Australian Trade Data and Retail Sales, Chinese Caixin Services and Composite PMIs, which could illuminate how the world’s second-biggest economy is recovering. Last month’s reading brought attention to the inflationary component of the survey as input costs rose solidly, which prompted firms to raise their prices again.
