April 26 (Reuters) – A look at the day ahead in Asian markets by Jamie McGeever.
An unholy trinity of US developments on Tuesday — poor corporate earnings, the value of a bank going up in smoke and plummeting consumer confidence — are likely to set an extremely somber tone for Asian markets on Wednesday.
This will be the backdrop to trade numbers out of Thailand and New Zealand, industrial production numbers out of Singapore and inflation numbers out of Australia.
Wall Street’s three main indices ended between 1% and 2% down – the Nasdaq’s 2% decline was its steepest in six weeks – as fears of a recession and the banking sector mounted.
The hardship at First Republic Bank FRC should be a wake-up call to anyone who thought the US banking crisis had somehow been resolved in a matter of weeks.
After Monday reporting a more than $100 billion slump in first-quarter deposits, the bank’s shares plunged 50% on Tuesday — the 15th largest in the country at the start of the year. The bank has lost 93% of its value this year.
The 4% decline in the broader US regional bank index — its fourth straight decline — brought its year-to-date decline to 25%.
Notably, the collapse in US bond yields and associated Fed expectations did not weaken the dollar – safe-haven buying pushed it up 0.5% on one of its best days since the mid-March bank shock.
Safe-haven flows dominated Tuesday’s trading, with the Japanese yen, Swiss franc, government bonds and gold all posting strong gains.
If there’s any tailwind for Asian markets Wednesday amid headwinds, it will be post-hours results from Google’s parent Alphabet GOOGL.O and Microsoft .MSFT.O. Earnings from both tech giants beat Wall Street estimates, and shares of both companies are up 4% in after-hours trading.
On the economic data front on Wednesday, Australia’s weighted annual CPI inflation is expected to have finally slowed to 6.9% in the first quarter from a 33-year high of 7.8%.
Here are three key developments that could give markets more direction on Wednesday:
– Australia CPI inflation (Q1)
– Manufacturing in Singapore (March)
– Thailand Trade (March)
By Jamie McGeever; Editing by Josie Kao
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Jamie McGeever
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