Asian equities could trade on solid footing following a strong rally on Wall Street after ISM Services data indicated a surprise rise. Participants also were unwinding geopolitical risk premia as US House Speaker Pelosi’s visit to Taiwan concludes. This could benefit Asian equities, especially the microchips names. In contrast, eyes remain on any potential escalation of the US/China tensions; any economic sanctions from China that could affect the positive risk sentiment and market positioning.
On the macro front, the China Caixin PMI data was mixed yesterday, and today’s session brings relatively light data that paves the way for Friday’s release of US Non-Farm payrolls. A cooling in hiring could be a predecessor for the FOMC to slow the rate hikes, and if sustained in August, which could indicate a 50bps hike at the September meeting.