Asian equities might maintain their upward trajectory, bolstered by the dovish outlook from Wall Street and Europe, enhancing risk appetite. Market participants are assimilating recent initiatives by China aimed at stimulating the economy and fortifying equity markets. With anticipations high for further developments, traders are poised for potentially enhanced risk-on price dynamics, especially in the lead-up to any official announcements as the weekend approaches. The CSI 300 Index is on the verge of surpassing a downward trend that has persisted since August of the previous year, showing more vigor in its current attempt compared to a similar effort in late December, attributed to the altered market conditions and price movements.
In the U.S., the unexpected rise in initial jobless claims for the week ending January 20th, reaching 214,000 against a forecast of 200,000, served as a key macroeconomic indicator for the session. This data, indicating a softening job market, overshadowed the robust U.S. quarterly GDP figures, often viewed as a lagging indicator. Consequently, money markets pricing for the Fed meetings have slightly shifted their Federal Reserve rate expectations toward a more dovish stance. All eyes are now on the upcoming U.S. PCE Core Deflator and personal spending data. Any deviations or downward revisions could trigger further short-term rate adjustments and bolster risk assets. It’s important to note the market’s current bias towards any data or argument favouring a dovish narrative and a ‘soft-landing’ scenario, potentially making the impact of any hawkish data transient.
