Asian equity markets mostly slumped as the negative mood rolled over from the US. The major indices extended on declines led by underperformance in energy and financials amid lower oil prices and yields. Traders are watching US Treasuries yields as it could give hints of market positioning in the sessions ahead before the FOMC meeting next week. As of note, the 10-year US Treasury Note traded below its 50-day moving average, 1.54%, for the first time since November last year. As US yields continue the flattening move, it might provide some ground for the Yuan, EM Asia-Pacific high yielding currencies like the AUD and KRW. It could also bring back some buying flow to Asia Bond and higher duration names equity markets as the tech sector. Nikkei 225 closed down -2.0%, heavily pressured by a firmer FX trade. The government reportedly declared an emergency in Tokyo, Osaka and Hyogo due to COVID-19, whereby a formal ruling could be made as soon as this week.
It was a session of risk recovery in Wall Street amid a backdrop of Bank of Canada tapering and the continued earnings deluge. S&P500, Nasdaq and Dow Jones all up around 1%, while the fear index, the VIX, sat back at the 17 level. There is something of a pause at play too ahead of Thursday’s ECB; worth paying attention to if there will be any updates on the economic expectations and how the ECB will reassess the pace of its asset purchases by the end of the first semester. US corporate earnings continue to sit in the background, which overall has been solid. In the session ahead, tech investors will be paying attention to Intel, scheduled to report first-quarter after the close of US markets. On average, Intel is expected to post adjusted earnings of $1.15 a share and revenue of $17.79 billion from Intel, according to analysts surveyed by FactSet.
