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Asian equities could outperform their US and in particular European peers as they face fewer geopolitical risks. The region looks relatively less vulnerable and offers attractive valuations. For instance, Japan's forward PE ratio stands at 13.4, much lower than the levels seen for the US (20.2) or EU (14.4). Conversely, stocks in Europe are the most at risk because of their proximity to the war. In the US, not only does the war add upside risk to inflation, and it also raises the odds of a bumpier growth. Central bank policy is another reason to favor the region. While the BOJ and the PBOC are sticking to easy monetary policies, the Fed is probably getting ready to hike interest rates in March, and the ECB members are debating how to end their stimulus program. As such, Asia may offer a haven from the greatest risks.

Salesforce reported strong top and bottom-line results in its fiscal Q4 earnings report as demand for its cloud-based software remains robust.  Revenue grew 26% in the quarter and management issued strong guidance, sending shares 3.5% higher in pre-market. Shares are still roughly 15% lower year-to-date. The bullish earnings from Salesforce suggest the shift to the cloud is accelerating to the next level. Software and cyber security basket names are showing pockets of strength in this market. 

Rising uncertainty as a result of the widening conflict in Europe is sending investors to reassess the potential for interest rates to rise. In the last 24 hours, US 10-year treasury yields have dropped 10bp to 1.73%, a big drop from the level of 2.05% reached just 2 weeks ago, prior to the Russian invasion of Ukraine. Traders are bracing for more persistent uncertainty to affect not only the US Federal Reserve but also the European Central Bank. German 10-year bond yields are back in negative territory for the first time in a month. The two-year German yield has now slumped to -0.63%. Lower long-term yields are expected to be a net positive for long-duration risky assets, most often found in growth stocks. The big picture improves for stocks overall given their relative attractiveness versus the government bonds.

The escalation in geopolitical conflicts and the withdrawal of monetary support is a cause of high uncertainty, and weighing heavily on markets. AAII US Investor Sentiment indicator shows levels of fear approaching early 2020 levels; very depressed momentum for risk-assets. This morning, the risk-off mood in European markets is clear, with Stoxx50 falling nearly 3% from Friday's close. Banks, autos, and insurance lead declines, while miners and utilities are providing some reassurance. German yields are sharply lower at the front end, in line with Treasuries, despite current inflation worries. In the US, S&P500 futures were down nearly 2% at one point, but are trading now near session highs as investors weigh over-the-weekend sanctions. The index is down 10% year-to-date. 

Earnings for emerging tech companies have essentially been a minefield as investors digest tighter financial conditions, geopolitical risk, and high expectations with difficult year-over-year growth comparisons. Companies need to over-deliver. Etsy stock is gaining 16% this morning in US pre-market, as it reported earnings that topped estimates in sales and EPS. The 96.3 million active buyers were slightly higher than the 95.6 million projected. Sales growth slowed to 16% yoy during the quarter, much lower than the 100% growth of 2020. The stock is still roughly 39% lower year to date, as pandemic beneficiaries corrected across the board hit by a reality check of tighter financial conditions and a post-Covid world, triggering a difficult environment for growth investors.