By Jamie McGeever
(Reuters) – A look at the day ahead in Asian markets.
Asia kicks off the last full trading week of 2024 with the monthly ‘China data dump’ on Monday, and with investors aiming to keep the stock market bull run going as central banks around the world go into easing mode.
Several G10 central banks cut interest rates last week or, in the case of Australia, indicated they would do so soon, and authorities in China have vowed to dive even deeper into monetary and fiscal stimulus territory.
This helped boost risk appetite despite the tendency to take chips off the table before the end of the year and with Wall Street at record highs.
A new wave of decisions from G10 central banks, including the Federal Reserve, will go a long way in determining whether this continues this week. A quarter-point rate cut by the Fed is almost certain, according to futures market prices, while in Asia the focus will be on the Bank of Japan.
The BOJ is moving in the other direction and slowly ‘normalizing’ policy after years of zero interest rates. Could last week’s stronger-than-expected ‘Tankan’ survey of business conditions seal a rate hike this week?
Economist Phil Suttle thinks so.
“The question now is whether the BoJ has the confidence to take this step or whether… (Governor Kazuo) Ueda might prefer to wait (for what?). Importantly, the normalization of interest rates would be presented as a success, not a problem. ,” Suttle wrote on Friday.
Meanwhile, the South Korean won could come under further selling pressure following the ouster of President Yoon Suk Yeol on Saturday, the latest twist in a remarkable crisis sparked by his surprise decision to impose martial law on December 3 to feed.
Monday’s economic calendar in Asia is full of potential market-moving numbers, especially the combination of Chinese economic indicators including industrial production, fixed asset investment, retail sales, house prices and unemployment.
This comes days after Beijing said it will widen the budget deficit, issue more debt and ease monetary policy to support growth. China is preparing for more trade tensions with the US, and US Treasury Secretary Janet Yellen told Reuters on Friday that Washington would not rule out sanctions on banks and further curbs on “dark fleet” tankers.
Investors have welcomed Beijing’s stimulus announcements since September. But only time will tell whether they will pull the economy out of the crisis and deflation in the real estate sector, revive growth and attract investments back to the country.
