Asian bourses started the trading session moderated following the primarily negative lead from Wall Street, where risky assets took a blow amid cryptocurrencies sell-off. The strong downside was triggered by China’s move on yesterday to ban financial and payment institutions from providing cryptocurrency services. Furthermore, markets focused on the FOMC Minutes, which suggested the potential for tapering discussions if rapid progress is made towards goals. The text was taken somewhat hawkish by traders. It is the first indication we have had from a FOMC Minutes about the discussion of quantitative easing tapering.
For the session ahead, markets will likely digest the slightly hawkish tone from the Fed, and it is worth keeping an eye on the commodity complex as well. Substantial losses were seen in Chinese commodity prices at the reopening of trade, with Dalian iron ore futures trading down 7%. During the US session, China’s Cabinet said it is paying great attention to the negative impact of surging commodity prices and will step up imports, exports, and stockpiling commodities. China will curb unreasonable increases in commodity prices, limiting the passing through to headline inflation and urging coal producers to boost production to meet demand in summer. The Chinese Cabinet said it would step up oversight of commodity futures and spot markets and crackdown on abnormal transactions.
