Asian equities could trade on the backfoot as the week started with another risk-off session, with the S&P 500 falling beneath 4,000 into the close while the volatility index, VIX, was above 35 points. The May selloff resumed, and the drivers were more a continuation of ongoing concerns, including recession fears and supply chain problems in China with its zero-COVID policy. Also, weighing on liquidity, risk premium, and asset portfolios was the global central bank monetary policy tightening and geopolitical woes rather than a new fresh driver.
The volatility in the energy sector could continue as Oil prices have sunk amid global risk assets deleverage, beginning with a continuation of growing China demand concerns amid lockdowns and sharply weaker China export data. Looking ahead, the trader’s focus will be on the region’s digestion of Monday’s NY price action, supplemented by headline watching with a deluge of Fed speak on the radar and US 3-Year Treasury Note supply also scheduled.
