DEC 12 (Reuters) – A look at the day ahead in Asian markets by Jamie McGeever.
The finish line for one of the most turbulent years in financial markets on record is in sight, but investors need to brace for a final bout of volatility this week as the Federal Reserve and three other major central banks set interest rates.
The Fed, European Central Bank, Bank of England and Swiss National Bank are widely expected to hike rates by 50 basis points each later this week, so potential market disruptions will come from subsequent news conferences.
In Asia, the Central Bank of the Philippines is expected to follow the Fed in reducing the pace of rate hikes to 50 basis points from 75 basis points at its last meeting, and policymakers in Taiwan are expected to hike another 12.5 basis points.
Chinese retail sales, Indian inflation and Australian unemployment are among this week’s regional economic data highlights, and markets will continue to be sensitive to bobs as Beijing eases its zero-COVID policy.
But the direction and tone for the week will be set by Fed Chair Jerome Powell in Washington and, to a lesser extent, European Central Bank Governor Christine Lagarde in Frankfurt and Bank of England Governor Andrew Bailey in London.
So far this month we’ve had ‘hawkish’ migrations from Australia and India, offset by a ‘doveish’ migration from Canada. Investors are entering the sessions in cautious sentiment – the MSCI Asia ex-Japan Index posted two straight weekly declines and the MSCI World Index just posted its biggest weekly decline since September.
This despite clear optimism regarding China’s economic reopening – Shanghai stocks are up 3.3% last week and have risen for five of the last six weeks, and both onshore and offshore yuan exchange rates have risen recently week above the 7 per dollar mark.
diagram
But as China’s COVID restrictions fade, China’s healthcare system will be put to the test and the impact on its 1.4 billion people remains to be seen.
Meanwhile, in Hong Kong, pro-democracy tycoon and China critic Jimmy Lai has been sentenced to more than five years in prison for fraud.
Annual inflation in India is expected to have slowed to 6.4% in November from 6.77% in October, the lowest reading since February.
Three key developments that could give markets more direction on Monday:
– Inflation in India (November)
– Commodity Prices Japan (November)
– Japan Business Survey Index (Q4)
Reporting by Jamie McGeever in Orlando, Florida; Editing by Diane Craft
Our standards: The Thomson Reuters Trust Principles.
The opinions expressed are those of the author. They do not reflect the views of Reuters News, which is committed to integrity, independence and freedom from bias under the Trust Principles.
Jamie McGeever
Comments are closed.