Asian markets are poised for a positive start on Wednesday, as investors continue to embrace risk assets. This positive sentiment is being driven by strong performances in global markets, including the S&P 500 and MSCI World index, which recorded their best daily gains in two months on Tuesday. The FTSE 100 in Britain also hit a record high, while the MSCI Asia ex-Japan index registered its biggest rise in a month.
Several factors are contributing to this upbeat mood in markets. Strong demand for a $69 billion sale of two-year U.S. Treasuries, lower bond yields across the curve, and a weaker dollar have all helped to loosen financial conditions. The U.S. earnings season has also delivered encouraging news, with companies such as Spotify and General Motors reporting strong results. Even Tesla, which reported a revenue decline and missed earnings estimates, saw its shares jump in after-hours trade due to the announcement of a new model launch being brought forward.
The positive outlook for Asian markets is likely to be bolstered by key economic events on Wednesday. The Bank of Indonesia is expected to keep its benchmark interest rate unchanged, while Australia will release its consumer inflation figures for March and the first quarter. Japan will announce its services producer price inflation data for March, and Thailand and New Zealand will release their trade data.
However, it is important to note that there are some potential risks that could dampen market sentiment. Sino-U.S. tensions may be bubbling up again ahead of U.S. Secretary of State Antony Blinken’s visit to China later this week. The U.S. is reportedly considering sanctions on some Chinese banks as a way to curb Beijing’s support for Russia.
Overall, the general tone across Asian markets on Wednesday is expected to be positive, at least initially. However, investors should remain cautious and monitor developments in global markets and geopolitical tensions for any potential impact on sentiment.
