Asian equities may start the week on a positive note, following the mostly higher major indices on Monday. Receding fears of the banking crisis and surging oil prices led to solid risk-taking flows, with cyclical sectors outperforming. The energy sector and value stocks performed well, while rate-sensitive industries such as Technology struggled due to a hawkish Fed repricing, dragging the Nasdaq in the red.
However, the unwinding of hedging and safe haven protection could lead to short-term price action as the US FDIC confirmed First Citizens Bank’s acquisition of Silicon Valley Bridge Bank’s deposits and loans. Authorities considering expanding the emergency lending facility to give banks more time to shore up their balance sheets also impacted the flow.
Investors should keep an eye on surging oil prices, hawkish repricing, risk-off positioning unwinding, and month-end trade as the week progresses. The banking sector, global economic indicators, and central bank speakers will also be closely monitored.
