Asian equities could trade firmer as traders await fresh updates on the banking sector, as the lack of bad news kept risk sentiment supported and allowed some pullback in the sector. Traders are also rolling futures and options exposures as Friday’s Quadruple Witching impacts short-term trade.
On the macro front, participants will keep a close eye on China as the PBoC is set to announce the 1-year MT lending rate and a raft of monthly releases, including Retail Sales and Industrial Production. With the contagion risk being the major theme that is driving price action, it is worth watching the USD and US Treasuries as lead risk indicators and awaiting any further Silicon Valley Bank (SVB) developments before key Central Bank decisions this week and the next. Any leak of dovish plans – a rate hike slowdown, pause or even a cut – could potentially lead to a risk-off trade as participants could read the action as the financial system being a complex contagion problem and liquidity facilities could be announced and QT and rate hikes readjusted.
