Asian Markets showed a mixed performance on Wednesday, following a negative trend on Wall Street. Observers are cautioning that the recent surge in equities might be losing momentum, and investors are eagerly awaiting fresh catalysts to reignite buying.
The subdued market activity across the region this week precedes key data releases from the US, including the Federal Reserve’s preferred measure of inflation and the upcoming corporate earnings season. Although the central bank hinted at three interest rate cuts this year, some investors are skeptical due to recent indicators and statements from policymakers.
Recent figures on February’s durable goods sales, released on Tuesday, indicated a healthy state of the world’s largest economy and a slight improvement in consumer confidence, albeit with less optimism about the future.
Upcoming releases include jobless claims, economic growth readings, and the crucial Personal Consumption Expenditures (PCE) index on Friday. Analysts anticipate a modest uptick from January in the PCE index, which is not likely to unsettle markets significantly, although a significant deviation could raise concerns.
The following month marks the onset of earnings releases, which could profoundly impact sentiment. The recent market rally has been partly fueled by expectations for future profits, making corporate earnings performance crucial.
Stephen Innes of SPI Asset Management remarked, “With market valuations at lofty levels, there’s little room for corporate earnings performance to falter or for the Federal Reserve to deviate from its anticipated course of three rate cuts. Any divergence from these expectations could potentially lead to market turbulence.”
On Wall Street, all three main indexes closed in negative territory, despite spending most of the day in positive territory. In Asian trading, Hong Kong, Shanghai, Seoul, Jakarta, and Wellington experienced declines, while Sydney, Singapore, Taipei, and Manila saw gains. Tokyo advanced by one percent, driven by a weaker yen fueled by comments from Bank of Japan board member Naoki Tamura, indicating a continued stance of easy monetary policy for now.
