Asian equities could trade in a defensive mood following a choppy trade on Wall Street amid central bank speak and month-end trade. Traders are also watching the geopolitical front as reports Taiwan had fired warning shots at a Chinese drone. An influential Chinese journalist warned further aggressive actions from Taiwan “may trigger a war”. It is worth noting that US-listed Chinese shares tumbled after reports on the back of China/Taiwan escalation. Regulatory concerns could keep some stocks under pressure as Alibaba is reportedly among several Chinese companies that US regulators have selected for audit inspections.
On the macro front, the docket is busy with Chinese Official PMIs on the radar, which could further caution global local and global expectations if it prints below market expectations. It is still unclear if the PBoC could keep easing policy to support an economy that has been slowing due to the COVID lockdown policy. At the same time, players will be eyeing the upcoming US private-sector employment report data that will bring a new method that will provide more robust and high-frequency data ahead of Friday’s Nonfarm Payroll report on Friday amid hawkish pivot from policymakers and market pricing.
