Asian equities could trade positive as global peers bounced after the Bank of England announced that it was restarting bond purchases until October 14th to stabilize local markets amid low liquidity, high volatility, and margin calls worries. Traders will be looking for bargains as both major Wall Street indices – S&P500 and Nasdaq – rallied more than 2%, with small-caps being the outperformer rising more than 3%.
On the macro front, traders will also be looking for energy names as Oil rose more than 3% due to the hurricane seasons shutting down production in the Gulf of Mexico, a weaker dollar and traders eyeing potential production cuts from OPEC+ at next week’s meeting. On the FX front, the Yuan could get short-term support as the PBoC warned against one-way speculation against the Yuan. For the session ahead, traders will adjust positions due to the huge drop in global yields as demand for risk assets recovers after the BoE intervention. Participants will watch today’s BoE bond buying auction to gauge how markets are willing to demand the central bank’s liquidity. Expectations towards the auction could keep supporting bond yields and equities.