Asian equity markets are poised for a positive trading session, buoyed by encouraging trends from global risk assets, particularly Wall Street. The decline in US Treasury yields has bolstered the equity landscape, further uplifted by strong earnings reports from Amazon and Meta, propelling the S&P 500 and Nasdaq to intraday peaks. Following a slightly hawkish stance from the Fed meeting, traders are inclined to increase their risk exposure, buoyed by the optimistic market sentiment. However, caution is advised due to emerging risks, notably from regional banking stocks which have come under scrutiny. New York Community Bancorp’s alarming financial disclosures have cast a shadow over the sector. Demand for safe-haven assets such as US Bonds, Gold, and the Japanese Yen surged as investors retreated from regional banking equities yesterday, indicating that further sector-specific worries could potentially benefit short-term risk markets.
In the geopolitical arena, traders are exercising caution in light of the United States authorizing military operations against Iranian assets and personnel in Iraq and Syria, a response to recent attacks on U.S. forces, which could heighten regional tensions. Oil markets felt the strain from rumours of a cease-fire in the Israel-Hamas conflict, which could lead to underperformance in this sector, pending official confirmation of a truce. A critical focal point this Friday is the US Nonfarm Payrolls report, anticipated to reflect the impact of weather-related disruptions, particularly in weather-sensitive sectors. The importance of the revised data cannot be overstated, as a deviation from expectations could trigger increased risk-oriented trading, especially in light of Federal Reserve Chairman Powell’s remarks on the Fed’s readiness to adapt policy in response to significant shifts in labour market conditions.
© 2019 High Leverage FX - All Rights Reserved.
© 2019 High Leverage FX - All Rights Reserved.