Home Economy News Marketmind: On a roll, China open again

Marketmind: On a roll, China open again


Marketmind: On a roll, China open again By Reuters

Breaking News



Published Feb 18, 2024 04:47PM ET

© Reuters. FILE PHOTO: A passerby walks past an electric monitor displaying various countries’ stock price index outside a bank in Tokyo, Japan, March 22, 2023. REUTERS/Issei Kato/File Photo

By Jamie McGeever

(Reuters) – A look at the day ahead in Asian markets.

China’s markets open on Monday after the Lunar New Year holiday, with investors hoping positive momentum across the region last week can continue despite signs that U.S. inflation, and therefore interest rates, may be stickier than thought.

Asian stocks are on a decent run – the MSCI Asia & Pacific ex-Japan index posted its best week of the year last week, a gain of 2%, and its longest weekly winning streak in over a year of four ‘up’ weeks in a row.

Was it a coincidence that China was closed? Investors may draw their conclusions on Monday as China reopens for trading.

There are signs that the China gloom may be lifting, even if only temporarily. Equities have rebounded from five-year lows, and official figures on Sunday showed that tourism revenues in the Lunar New Year holidays beat pre-COVID levels.

The data will offer relief to policymakers battling slowing growth, deflation risks, weak consumer demand and a property sector collapse, although the sustainability of the tourism boost remains uncertain.

China’s central bank on Sunday left a key policy rate unchanged as expected when rolling over maturing medium-term loans, an indication that benchmark loan prime rates will also be kept on hold later this week.

Beijing is striking a delicate balancing act to support the economy at a time when signs of persistent deflationary pressure call for more stimulus. But aggressive easing risks reviving depreciation pressure on the yuan and capital outflows.

Surprisingly hot U.S. producer and consumer price inflation figures last week pushed up Treasury yields, strengthened the dollar and raised doubts on how much the Fed will cut rates this year. Is a second wave of inflation forming?

This general tightening of financial conditions could temper any optimism in Asian market trading on Monday. Goldman Sachs’s emerging market financial conditions index last week touched its highest level in three months.

The boom in Japanese markets, meanwhile, shows no sign of fading. The Nikkei rose 4.3% last week and is now up 15% so far this year, supported by growing optimism around corporate Japan’s earnings prospects, and a very weak currency.

With the Nikkei within a few hundred points of new all-time highs, the market is probably ripe for a spot of profit-taking. But if the dollar holds above 150 yen and launches another test of its recent 33-year peak around 152 yen, a fresh record is on the cards.

Asia’s economic calendar highlights on Monday are Thailand’s fourth-quarter GDP and Japanese machinery orders. China’s foreign direct investment data could also be released.

Interest rate decisions in South Korea and Indonesia, a flood of PMI reports from across the continent, and Reserve Bank of Australia meeting minutes will help set the tone later in the week.

Here are key developments that could provide more direction to markets on Monday:

– Thailand GDP (Q4)

– Thailand trade (January)

– Japan machinery orders (December)

(By Jamie McGeever; editing by Diane Craft)

Marketmind: On a roll, China open again

Our Apps

Terms And Conditions
Privacy Policy
Risk Warning
Do not sell my personal information

© 2007-2024 Fusion Media Limited. All Rights Reserved.

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

Related News