Asian equities may trade on the back foot as participants took profits during the Wall Street session. U.S. equity markets experienced a significant downturn on Thursday, erasing earlier gains by market close. With the Memorial Day holiday in the U.S. on May 27th and month-end approaching, early rebalancing might be occurring after May’s strong performance. Aside from positioning, there is no dominant market theme or new fundamental catalyst in the near term that could significantly alter market movements in Asia.
On a positive note, the technology sector might see positive flows as it was the only sector to close in the green yesterday, primarily buoyed by Nvidia, which surged 9% following a robust earnings report on Wednesday. Looking ahead, key market highlights for today include April’s US durable goods orders, comments from Fed’s Waller, and the University of Michigan’s final May consumer sentiment and inflation expectations. Additionally, data from Japan’s CPI will be closely watched. Although the data is unlikely to change the BoJ’s policy stance, a miss in the reading could ease Japanese bond yields, support equities, and keep the JPY under pressure. Hedging flows may be seen as profit-taking could be a key driver ahead of the extended U.S. Memorial Day weekend.
