Asian markets could trade on the backfoot as stocks were sold on Wall Street as investors are still digesting the cloudy outlook for the global economy next year when major Central Banks will reach their rates hike peak. Worrying with rising costs spooking demand and labour costs, affecting operational margins, and a wave of equity downgrades, defaults, and poor earnings are on the radar for the upcoming quarters.
For the session ahead, it is worth noting that liquidity is thin across multiple asset classes as traders enter the final full trading week of the year. On the macro front, traders will be keeping an eye on the Yuan as it traded flat against the Dollar ahead of the PBoC LPR decision later today. Participants expect the PBoC to maintain its 1-year LPR unchanged at 3.65%. But many participants are also eyeing a cut to the 5-year rate as China is to announce further stimulus support, especially for the property sector. The 5-year is of particular influence on the pricing of mortgages. So a rate cut to the 5-year would support the property sector at the margin.
