Asian equities may experience sideways trading as market participants anticipate a shorter trading week due to regional holidays. In the US, major stock indices exhibited restrained price action, pausing their recent upward trend. Notably, Chinese stocks have attracted significant inflows, buoyed by an increasingly positive economic outlook. The technology sector deserves attention as Tesla‘s stock surged 15% after the company received approval for its Full Self-Driving technology in China, further intensifying a short squeeze.
On the macroeconomic front, traders are focused on the upcoming Chinese PMI releases, which are expected to reflect continued improvements in the manufacturing sector. This optimism is supported by recent high-frequency data and previous surveys, indicating sustained expansion in both supply and demand, and reinforcing positive global manufacturing trends. Should the data meet or exceed expectations, Chinese equities, particularly in the cyclical sector, may find robust support.
In the foreign exchange market, the Japanese yen saw a notable increase, propelled by rumours and subsequent confirmation of Bank of Japan intervention. The yen’s trajectory could significantly influence Japanese equities, as a stronger yen typically pressures local stocks. As the month-end approaches, market dynamics will be crucial in the upcoming session before anticipated market closures for holidays. Market participants are also keenly awaiting the Federal Reserve meeting, with expectations that Chair Jerome Powell will continue a hawkish narrative in response to recent economic data. Pre-positioning for this meeting and key U.S. data releases this week are likely to be pivotal factors today.
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© 2019 High Leverage FX - All Rights Reserved.