Asian equities were cautious after the choppy trade stateside, where there was a reversal of fortunes among the major indices from the day before. JPMorgan Asset Management said in a note that was trimming its overall emerging markets exposure once again due to China’s fast recovery and expectations that policymakers might be more conservative and worry more about containing debt and property market risks. The S&P 500 and Nasdaq closed negative amid underperformance in tech names. Conversely, the Dow Jones jumped the trend and notched a fresh record high, with energy sectors the most significant gaining sector after WTI and Brent prices surged by more than 4%. Nikkei 225 also lacked firm direction amid an indecisive FX trade, and Japan considers stricter COVID-19 measures for areas surrounding Tokyo. Shanghai Composite underperformed as tensions between the US and China lingered amid the US delegation visit to Taiwan and with China’s military to conduct live-fire drills off Taiwan, which is viewed as a ”declaration of sovereignty” and warning to foreign countries. At the same time, China’s top official in Hong Kong also warned that any foreign power which attempts to use Hong Kong as a pawn would face countermeasures.
In Wall Street, tech and growth names outperformed on Thursday after a stocky bull-flattener in US Treasuries yields, with firm economic data looked through with better-than-expected Initial Jobless Claims. Unfavourable yield differentials offset decent Philly and New York Fed surveys. The yield on a US 10-year Treasury Note fell 10bps to levels not seen since early March amid large, short covering and momentum play. Earnings season continues, and while it is still early, most reports have been well above the market’s forecasts. Although there appears to be a common theme of “sell the news”, it will be worth seeing if that trend continues into next week as the calendar picks up. Ahead of the day, traders will pay close attention to the preliminary University of Michigan survey for April. China data is also on the global investor’s radar; according to a recent Reuters survey with market analysts, China’s activity data might show GDP jumping a record 19% in the first quarter from a year earlier, after a 6.5% expansion in the last quarter of 2020.
