Asian markets could trade positive following positive tailwinds from global equities flows starting a new quarter. News flow is still relatively thin on the macro front, with traders centring on Ukraine, where Western Allies are reportedly preparing further sanctions to be announced Wednesday in response to alleged atrocities in Bucha, Ukraine. The USD was bid by geopolitical developments and a steeper US yield curve. On equities, participants are still mostly bullish following an easing monetary policy in China that could support trade this year. Many are weighing whether the start of Fed tightening could not be seen as hostile for equities exposure, at least not in the early stages, considering that after initial repricing volatility, equities always tend to make new all-time highs as the Fed adjusts the cycle.
The April RBA meeting/decision is the highlight overnight, with markets expecting policy to remain unchanged and watching for any fresh, forward guidance. Today’s US docket will be headlined by ISM Services PMI data ahead of this week’s main event: the FOMC meeting minutes. Where desks will be looking for clues on the balance sheet strategy as markets have largely discounted the aggressive rate trajectory.
