Asia equities are trading cautiously as US and European equities sold-off amid lagging global growth anxieties, recent Fed taper rhetoric and China’s ongoing crackdown. The Chinese tech sector could continue under pressure as China’s government ordered gaming firms, including Tencent Holdings and NetEase, to ensure they implement the new time limit for providing online games to teenagers.
On the COVID front, the Japanese government confirms seeking an extension of the state of emergency for Tokyo and other prefectures through September 30th due to the Delta variant infections. For the session ahead, traders will digest the fresh mixed data from China’s PPI and CPI – PPI (YoY) came 50 bps above market expectations, and CPI (YoY) came 20 bps below expectations. On the Fixed Income traders radar, some negative news could pressure the complex as Evergrande Shenzhen-traded January 2023 bond sank over 20%, and trading was halted. Recently, the company’s credit rating was downgraded by rating agencies amid default concerns.
For the session, traders will be watching very closely the main risk event expected this week, which is the ECB monetary policy decision, where traders are waiting for tapering guidelines amid growing inflation fears in Europe.
