Asian equities are trading positive amid strong risk-on flows after a positive day for Wall Street equities, especially Chinese stocks. In the USA, a bounce was aided by Fed Chair Powell’s consistent, measured tone, even as he stated that the Fed has the scope to move in larger than 25bp increments when it comes to rate hikes if needed. Fed Funds Futures pricing cooled off during the press conference, with a 50bp hike in May now seen with 31% probability having been 58% shortly before Powell spoke.
The Chinese equity market rally with China’s pledge to throw a lifeline to embattled domestic markets and some peace hopes on the Russia-Ukraine conflict was also feeding into price action. On the macro front, participants are already looking ahead to tomorrow’s BoJ monetary policy decision & CPI print. Later in the session, participants digest the latest weekly jobless claims readings, housing starts & building permit data, industrial production, and the latest survey from the Philly Fed. Worth noting that price action could change due to Friday’s Quadruple Witching with major indices and options expiry in play as traders look for liquidity.
