Written by Jamie MacGyver
(Reuters) – A look at the day ahead in Asian markets.
Asia begins the final full trading week of 2024 with the monthly ‘China data dump’ falling on Monday, and with investors leaning towards keeping the stock market uptrend going as central banks around the world enter easing mode.
Several G10 central banks last week cut interest rates, or, in the case of Australia, indicated they might do so soon, and authorities in China pledged to delve deeper into monetary and fiscal stimulus.
This has helped boost risk appetite, despite the tendency to take the chips off the table before the end of the year and with Wall Street rising to record levels.
Another wave of G10 central bank decisions, including those from the Federal Reserve, will go a long way in determining whether that continues this week. A quarter-point rate cut from the Fed is almost certain, according to futures market pricing, while in Asia, the focus will be on the Bank of Japan.
The Bank of Japan is heading in the other direction, slowly “normalizing” policy after years of zero interest rates. Could a stronger-than-expected Tankan survey of business conditions last week lead to an interest rate hike this week?
Economist Phil Satell thinks it should.
“The question now is whether the Bank of Japan has the confidence to make this move or whether… (Governor Kazuo) Ueda may prefer to wait (why?). Most importantly, interest rate normalization will be presented as a success, not as a problem. Satell wrote on Friday.
Meanwhile, the South Korean won may come under further selling pressure after the impeachment of President Yeon Suk-yeol on Saturday, the latest development in a notable crisis sparked by his surprise decision to impose martial law on December 3.
Monday’s economic calendar in Asia is full of potential market-moving releases, especially a host of Chinese economic indicators including industrial production, fixed asset investment, retail sales, house prices and unemployment.
This comes days after Beijing announced that it would increase the budget deficit, issue more debt and ease monetary policy to support growth. China is preparing for more trade tensions with the United States, and US Treasury Secretary Janet Yellen told Reuters on Friday that Washington would not rule out imposing sanctions on banks and imposing more restrictions on “dark fleet” tankers.
Investors have welcomed Beijing’s stimulus announcements since September. But only time will tell whether they will be able to lift the economy out of stagnation and deflation in the real estate sector, revive growth, and attract investment back into the country.
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