Asian equities could trade on the backfoot after sell-off on Wall Street

Asian equities could trade on the backfoot after a sell-off on Wall Street led by the Tech sector after reports that digital advertising companies face European restrictions. It is also worth noting that US Treasury Yields were supported amid strong US data ahead of next week’s US Consumer Price Index and the Fed rate decision. Higher yield kept USD bid and weighted on other risk assets as defensive positioning was preferred.

Although the background tone is negative for global equities, on the macro front, tailwinds for Asian assets are piling as the Yuan benefitted from ongoing COVID easing hopes. Reports state that the Chinese government may soon announce new steps for COVID responses. The upbeat could drive short-term price action as traders have been speculating for an official announcement as soon as today. And the investor sentiment is better as yesterday’s reports also noted that “the cage of the epidemic is being shattered, and the appearance of Chinese society will change every week”.