Asian equities could see a strong bounce from the recent lows as US stock traders looked through the surprise contraction in US GDP data. Throughout the session, the equity market strengthened with the tech Nasdaq leading the gains, closing +3.5% higher after persistent buying flows on US and global equities as US real yields eased. Traders will be closely watching tomorrow’s March US core PCE print, with many desks talking about a potential downside risk after today’s miss on US GDP data. Any prior revisions could be key to digest the recent data.
Investors closely monitor the USD as the Dollar Index (DXY) strengthened to a 20-year high just shy of 104.00 despite the GDP disappointment. With a climbing USD with positioning before the FOMC event and heavy month-end flows to buy the Greenback, cross-asset correlations could assist in understanding the noisy price action in the coming days. On the geopolitical front, Oil prices rose amid reports Germany dropped its resistance to an EU embargo on Russian oil, with an EU oil ban said to be imminent but no date currently set. Looking ahead, desks will be trading the last month with technical and macro flows hitting the tape with relatively thin volume. It is worth noting that the Japanese holiday is closed for Showa Day.
