Asian equities could trade sideways as liquidity starts to pick up after US Presidents’ Day holiday. Traders will now be positioning for Wednesday’s FOMC minutes. Currently, markets are pricing a slightly hawkish Fed amid strong US employment data and mixed signals from the latest US Consumer Price Index. Last week, some headwinds hit the risk-on sentiment after voting FOMC members started favouring a 50 bps hike in the next meeting if data continues to show that price pressures aren’t easing as the Committee expected.
On the macro front, desks have been talking about a potential outperforming of Chinese equities this year as the nation’s reopening efforts bolster business profits. Chinese stocks continued rallying amid liquidity injection by the PBoC, which also maintained its benchmark lending rates as expected. Although, it is worth keeping an eye on the geopolitical front as the US warned of consequences if China provides material support to Russia over Ukraine war.
