Asian stock markets may open mixed, influenced by Wall Street‘s recent risk-averse trading, despite positive PMI data from China and the U.S. Congress successfully avoiding a government shutdown. The Large-cap Tech and Communication sectors in China might face headwinds due to rising yields, predominantly driven by the U.S. Treasury curve, which is currently seeing multi-year highs. This upward trend in yields also places Emerging Markets’ assets and currencies in a vulnerable position. Given that China is observing its Golden Week holiday, markets might see subdued liquidity and limited price action.
On the broader economic front, the strengthening dollar, combined with increasing risk aversion, has led to a dip in oil prices. This might exert pressure on sectors that are sensitive to oil price movements. Market participants are now keenly awaiting updates from the upcoming OPEC+ JMMC meeting. The recent U.S. ISM Manufacturing PMI, which surpassed expectations, indicates a promising employment landscape. This comes just before the anticipated Nonfarm Payroll data release on Friday and the Job Openings and Labour Turnover Survey due later today. If these reports outdo forecasts, we could see further sell-offs in risk assets, pushing yields even higher. Additionally, all eyes will be on the Reserve Bank of Australia’s (RBA) upcoming decisions, with expectations that they will retain interest rates at 4.10%. Fed speakers will be on the risk radar as well.
