Asian equities may experience a positive trading session as a no-escalation conflict between Israel and Iran has encouraged market participants to unwind hedges and increase their exposure to equities. This shift in sentiment is supported by the softening U.S. dollar and lower U.S. Treasury yields, which follow subdued U.S. PMI data. Additionally, U.S. stocks have continued their upward trajectory, rebounding from last week’s decline. Traders’ expectations for a less aggressive stance from the Federal Reserve have prompted a bull steepening in T-Notes throughout the session.
In the FX markets and Japanese equity space, the Japanese Yen has shown strength following a report on upcoming discussions by the Bank of Japan about the rapid decline of the Yen, along with comments from Finance Minister Suzuki regarding potential foreign exchange interventions. As a result, the USD/JPY pair has remained below the 155.00 mark. This stronger Yen could influence the performance of Japanese equities. Market participants will be closely monitoring updates for any indications of how the Bank of Japan might address foreign exchange pressures during this week’s policy meeting.
Looking ahead, no significant economic data is expected before the release of U.S. GDP and PCE figures later this week. However, traders are likely to focus on Tesla’s earnings, which have already lifted the stock in after-hours trading following the company’s announcement to accelerate the launch of new vehicle models, originally scheduled to begin production in the second half of 2025. Expectations are also set for upcoming earnings from major U.S. tech companies like Meta, potentially maintaining a positive atmosphere in the tech sector ahead of these releases.
