Asian bourses started the trading session with a mild positive bias following a positive day on Wall Street which backed the S&P 500 and NASDAQ to fresh all-time highs. After the APAC holidays, Asian players will be positioning for the important risk events in the week ahead, including the FOMC monetary policy decision on Wednesday and the USD 2 tln SPX and SPY option expiry on Friday. These events might lead to some hedging and leverage activity in the Asian equity complex all week. Participants will be focusing on putting in some defensive plays as the inflation narrative could see some fresh insights from the Federal Reserve.
On the trade front, some upbeat headlines might drive some risk-on flows for the equity complex in the region as the UK-Australia free trade agreement is set to be announced later today. Elsewhere, in the geopolitical front, the G7 leaders mobilised behind US President Biden’s call to challenge China. China’s Embassy in London urged G7 nations to stop their interference in Hong Kong affairs. Worth keeping an eye on how the COVID restrictions will be playing out in the region as some parts of the world start to show strong signals of economic recovery like the LatAm countries, in which recovery expectations play an important role in the trade in Asia.
