Asian equity markets are trading in the red amid headwinds from Wall Street, where all major indices declined amid a slew of hawkish Fed speak. Fed Evans, who usually leans dovish, declared he pencilled in three hikes for 2022, but suggested four rate hikes may be necessary, a view also shared by Fed Harker this morning, as well as hawks Bostic and Bullard. With this hawkish tone, traders should watch closely how local Tech, Defensives and high beta and long duration stocks will be trading for the session ahead.
On the macro playbook, US Treasuries were supported and safe-haven currencies like JPY and CHF. It signals a more cautious tone than a rate related to trade, so it is worth paying attention to these macro assets to gain a small edge. On the China front, some positive news for the housing sector and the credit markets as Evergrande avoided its first onshore bond default after bondholders approved postponement. For the session ahead, participants will be digesting the solid Chinese trade data, in line with market expectations and keeping the stronger pace of last year despite the cooldown in local economic activity. On the radar later in the day, December US retail sales and industrial production data will headline in the final US session of the week, and equity attention turns to US earnings releases with Financials starting with JPM, C, WFC, and BLK set to report.