Asian equities could trade slightly positive after a mixed trading session on Wall Street with underperforming in the tech sector. Amazon suffered a bloodbath after earnings reports where shares dropped 21% and dragged major US indices with it, especially the heavy-tech weight Nasdaq. Amazon’s CFO says the company is preparing for what could be a slower growth period and is seeing weakness in Europe relative to the US. Traders keep digesting recent US company earnings releases that could shed light on future economic activity expectations.
The tech sector in Asia could remain under pressure as reports after the US close noted that the Biden administration is weighing further controls on Chinese technology. Although some tailwinds could come from the recent news that China’s Cabinet says fiscal and financial tools will support key projects and private investment in key projects. Also, on the dovish fiscal front, the Japanese government is to outlay for economic stimulus JPY 39trln. Next up, traders will be eyeing the BoJ rate, where no change is expected, but participants could react to a potential shift in the Yield Curve cap on the 10-year JGBs, which currently trades at 0.25%. Later in the session, traders will be eyeing the September US Personal Consumption Expenditures Price Index (PCE) report for a more accurate picture of the US economy’s pricing pressures. On this, traders will see how it relates to the hotter-than-expected CPI report ahead of next week’s FOMC meeting. If it misses expectations, the current market conditions support a dovish price action that could boost major FX pairs against the USD and risk assets in general as US rates could retrace further.
