Asian equity markets appear poised for a moderately positive open, building on mixed results from yesterday’s U.S. trading session as the month drew to a close. It’s essential to highlight those equities rallied at the closing bell, reflecting a typical month-end price action. This trade indicates a still robust appetite for riskier assets, especially in the wake of a diverse Central Bank week filled with policy updates and decisions.
Sector-wise, expect the energy and metals sectors to drive cyclical exposure higher. The boost stems from a recent surge in commodities, fuelled by assurances from the Chinese government about forthcoming support measures. These promises have helped commodities achieve their best monthly gain since January 2022. Attention will be closely paid to China’s newly implemented export controls as traders analyse the possible effects on the global semiconductor market. Moreover, the anticipated meetings and dialogues between U.S. and Chinese officials this week could further shape the landscape of tech and trade tensions.
In the currency markets, cyclical currencies, particularly the Australian Dollar (AUD), experienced gains, outperforming largely due to Chinese support. The AUD also benefited from anticipation regarding the Reserve Bank of Australia’s (RBA) impending decision. The market appears divided over the likely direction of interest rates following the release of cooler-than-expected Australian Consumer Price Index (CPI) data. All eyes will be on the RBA’s policy announcement as investors seek insights into Australia’s monetary policy future.
