Asian equities are expected to experience a downturn, following the tech-heavy NDX index‘s second-largest decline this year, surpassed only by the tumble in February. The sudden drop was sparked by unsatisfactory earnings reports from tech giants, Netflix and Tesla. Worth noting is that the sell-off coincided with the monthly stock options expiry date on Friday, and the Nasdaq 100 rebalancing, both potentially contributing factors to the market’s behaviour. The Chinese yuan remained resilient, propped up by positive commentary on China’s economy and an encouraging nudge from the People’s Bank of China (PBoC)’s reference rate. Additionally, the PBoC enhanced a cross-border financing tool designed to promote the influx of foreign capital. Nevertheless, the success of this move is dependent on the interest of foreign investors in the region. On a related note, reports indicate that China may consider relaxing mortgage restrictions in key cities to spur real estate transactions. Concurrently, the Vice Premier recognised the need to address fiscal and financial risks linked to emerging infrastructure projects.
Looking forward, attention turns to Japan’s National Core Consumer Price Index (YoY) data as the next significant economic indicator before the upcoming Bank of Japan meeting/decision. Should the data exceed expectations, it could prompt heightened anticipation of the BoJ adjusting its Yield Curve Control, potentially strengthening the Yen. Conversely, underperformance could trigger a dip in the Yen, benefiting the Dollar. In addition, traders will be strategically positioning themselves ahead of next week’s Central Banks decisions and a slew of crucial earnings reports.
