Asian markets are expected to open lower after US equities experienced a short-term sell-off heading into the NY close. The session was marked by choppy price action, with mixed earnings reports, mostly disappointing data releases, and continued hawkish rhetoric from the Federal Reserve adding to investor concerns ahead of the Fed blackout period before the May meeting. Despite this, Fed officials provided little incremental information about future monetary policy steps as the bank remains data-dependent, with a focus on higher rates for longer to bring inflation back to the 2% target. Today, technical traders may dominate short-term price action as US equity options expiry could cause imbalances cross-markets as traders settle and rebalance portfolios amid earnings seasons.
On the geopolitical front there are some headwinds for cyclical stocks as wires report that the US and its allies are said to be closer to a near-total ban on exports to Russia. On the tech front, Asian sectors exposed to Tesla may face selling rebalances, as the company’s stock saw a 10% loss due to concerns about falling margins amid aggressive price cuts. Tech sector traders will stay alert for updates on the China-US trade relationship, as President Biden is expected to sign an order that limits US investment into parts of the Chinese economy, particularly the technology sector. The People’s Bank of China also released a statement saying interest rates would be kept at appropriate levels, with renewed focus on interest rate risk in light of the SVB collapse in the US. FX settlement data for March is also expected to cross today, but it is unlikely to impact CNH price action.
© 2019 High Leverage FX - All Rights Reserved.
© 2019 High Leverage FX - All Rights Reserved.