Asian markets are poised for uncertain trading, mirroring Wall Street‘s lacklustre performance, as significant drivers for short-term momentum seem absent. The upcoming two trading sessions demand attention due to the influence of technical factors, particularly the Triple Witching expiry on Friday, which could sway market dynamics. The technology sector, already facing pressures, might lean towards a negative trajectory in Asia if it follows Wall Street’s lead. Additionally, the Federal Reserve’s blackout period before next week’s FOMC meeting is contributing to a cautious trading atmosphere.
In a significant turn of events, there’s increasing speculation that the Bank of Japan might consider ending its negative interest rate policy in its upcoming meeting, spurred by substantial wage hikes by major Japanese firms. This move could bring the central bank closer to achieving its 2% inflation target. The outcome of Japan’s annual wage negotiations, set to be revealed by the prominent labour federation Rengo this Friday, is highly anticipated and could influence the decision. Any indication towards a hawkish stance might strengthen the Yen and exert downward pressure on Japanese stocks. With a lack of major economic releases, the market’s focus shifts towards the forthcoming US retail sales and Producer Price Index data. The financial community is bracing for these releases, with a slight bias towards hawkish or expected outcomes, following recent mixed signals from US CPI data. The anticipation sets the stage for potential shifts in USD and US yield dynamics, with market sentiment possibly tilting towards a hawkish response.
