Asian equities may experience a cautious trading session, influenced by Wall Street‘s guarded stance, where only the technology sector managed to stay positive. This trend occurs amid escalating US yields and persistent geopolitical concerns in the Red Sea. The spotlight was on Federal Reserve’s Christopher Waller, whose comments were interpreted hawkishly by the markets. He advocated for “methodical and careful” rate cuts, diverging from the swift reduction approach typical of past cycles, in light of a robust economic climate. This hints at a possible shift from the Fed’s current dovish stance for 2024, which could be indicated through reactions in rate pricing, central banker statements, or unexpected positive shifts in US economic data.
Traders are now focusing on forthcoming US retail sales figures, earnings disclosures, and additional insights from Federal Reserve authorities. Regarding China, market watchers are keenly anticipating updates on the country’s industrial output and fourth-quarter GDP. Outperforming forecasts may energize the commodities market and encourage equity risk-taking, particularly if the data signals resilience in China’s economy against the prevailing slowdown. Chinese Premier Li Keqiang recently announced a rebound in China’s economy in 2023, with a growth rate of 5.2%, surpassing the 5% target. This declaration briefly uplifted the commodities market yesterday, though the momentum was tempered by strong US yields and the dollar, following hawkish comments from a Federal Reserve spokesperson.
