Asian equities could trade on the right foot as global optimism drove the price action yesterday as on diminished banking sector panic with major US bank institutions reportedly supporting the troubled First Republic Bank. The risk-on playbook moved rates higher and pushed equities to the highs; leading gainers were Communication Services and IT. Eyeing the FOMC next week, the May Fed terminal rate has climbed to 4.915%, and the USD was under pressure due to hedging unwinding. On equities, correlation trade could support the Consumer Discretionary and Financial sectors in Asia after its outperformance during the US session. Technical trade could play an important role in price action as major futures and options expiry, known as Quadruple Witching, will be on the radar. The focus then turns to the March FOMC meeting next Wednesday, with all eyes now on the banking sector and the market narrative shifting to potential hybrid liquidity support for banks in trouble. Headlines that keep this scenario could support risk assets, but some hedging could be demanded ahead of the weekend.
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