Asian equities are set to assess woeful Wednesday risk asset appetite as U.S. stocks suffered hefty losses, with the Dow Jones Index slumped by over 1,100 points and the S&P 500 dropping back beneath the 4,000 level, with retailers hit after poor earnings due to rising costs. The USD went bid amid safe-haven demand. Participants are heavy on cash, and recent price action shows a relentless ‘sell the highs’ type of flow. On the radar, some technical positioning could be adding further to the pressure ahead of Friday’s options expiry in the U.S. It is worth noting that liquidity conditions are still really poor cross-asset, which could cause more volatility as markets need to reprice assets with hawkish Central Banks and adjust portfolio exposure.
Traders are also keeping an eye on China’s COVID developments. Some defensive flows hit the tape with the general recessionary/stagflation fear in the wake of the previous COVID developments in Tianjin. Also will be digesting Chinese Premier Li’s latest remarks as he vowed to support tech platforms and the private sector while flagging a step up in adjusting macro policies.
