Morning offer: resilience vs end-of-term caution

By Jamie McGeever

(Reuters) – A preview of the day ahead in Asian markets.

The first definition that appears in an online search for the meaning of the term “resilience” is “the ability to resist or quickly recover from difficulties; tenacity “.

In global markets today, one word is probably enough: “Nasdaq” or “Nvidia.”

Shares in the global AI and chip sector fell 6.8% on Tuesday for their best day in a month, enough to recover from the previous day’s slump, pare the recent correction and set the tone for a rally US and global stocks driven by technology. .

There was no new news or impetus behind the move, which likely has as much to do with portfolio squaring and investor position adjustments as the end of the quarter and half approaches. something else.

With this in mind, it is difficult to predict the direction Asian markets are likely to take on Wednesday. Will Tuesday’s tech and mega-cap rally spark a buying spree, or will investors still be willing to limit their risk exposure before the quarter ends Friday?

There doesn’t seem to be much from Tuesday’s US session, other than the rebound in the tech sector, that could give a signal one way or the other: the dollar rose slightly, Treasury yields held steady and the tone of the two Fed governors’ remarks probably leaned toward the hawkish side.

Broader concerns over the weak yen and potential intervention by Japanese authorities, as well as the steady depreciation of the Chinese yuan, still weigh heavily on Asian markets. The lack of fresh news or developments on either front is unlikely to change the situation on Wednesday.

The regional economic data schedule is extremely light on Wednesday, with only Australian inflation and Singapore manufacturing data expected to be released.

Reserve Bank of Australia Deputy Governor Christopher Kent is expected to speak, while Thailand’s central bank will release minutes of its June 12 policy meeting and later hold an analyst meeting on the economy and monetary policy.

Inflation in Australia turns out to be much higher than expected. This explains why rates traders believe the RBA will be the most hawkish G10 central bank this year, with the exception of the Bank of Japan, and rate only a 1 in 4 chance of a rate cut this year.

The Australian dollar is responding accordingly: it is the second best performing G10 currency against the US dollar this year, behind the British pound.

Economists polled by Reuters expect the annual rate of weighted consumer price inflation to accelerate in May to 3.8 percent from 3.6 percent in April. This would be the highest this year and the second consecutive increase – which is not the direction favored by the RBA.

Here are the main developments that could give better direction to the markets on Wednesday:

– Inflation Australia (May)

– RBA Deputy Governor Kent speaks

– Singapore manufacturing production (May)

(Reporting by Jamie McGeever)

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