Written by Jamie McGeever
(Reuters) – Future outlook for the Asian market.
Sentiment in Asian markets was quite fragile on Monday following the release of a series of major economic indicators from China and last week's turmoil in global markets, with investors weighing US and Japanese policy decisions later in the week. I'm preparing myself.
Asian stock markets are on the defensive. The MSCI Asia ex-Japan index fell 1.4% on Friday, its steepest decline since January and its biggest weekly decline in two months, while Japan's Nikkei stock average fell 2.5%. It was the biggest weekly decline this year.
The sharp rebound in U.S. bond yields has hit risk appetite and was perhaps the main driver of last week's decline in global stocks.
The ICE BofA U.S. Treasury Index fell every day last week, its worst decline since August and the biggest weekly decline since October. Two-year Treasury yields rose 24 basis points, equivalent to a rate hike of almost a quarter of a percentage point.
This week's calendar in the Asia-Pacific region is filled with the release of very important economic indicators and central bank policy meetings, but of particular importance is the two-day Bank of Japan meeting starting on Monday.
There are growing expectations that the Bank of Japan will raise interest rates for the first time since 2007, ending the eight-year negative interest rate policy (NIRP).
Japan's biggest companies have agreed to a 5.28% wage hike in 2024, the steepest increase in 33 years, Japan's largest trade union organization announced Friday, and policymakers announced a historic move Tuesday. I have strengthened my view that he will appear.
Sources also told Reuters that the BOJ will provide guidance on how much government bonds it will buy upon expiration of NIRP and Yield Curve Control (YCC) to avoid market turmoil.
This week will see policy decisions from central banks in China, Australia, Indonesia and Taiwan, as well as inflation figures from Japan and New Zealand's fourth quarter GDP reports.
However, the week begins on Monday with four major Chinese indicators: business investment, retail sales, industrial production, and unemployment rate.
Green buds of China's recovery are beginning to appear little by little. There are signs that capital is no longer leaving the country, stock prices have rebounded and some economic indicators are improving, with China's economic surprise index at its highest since October.
However, the road to recovery will be long and difficult. Last week's figures showed house prices fell at the fastest annual rate in more than a year and growth in new bank lending was at an all-time low.
Monday's figures show that capital investment growth in February is expected to rise to 3.2% month-on-month, industrial production growth will slow to 5.0% and retail sales will also slow to 5.2% month-on-month. These are all year-over-year measurements.
Here are the key trends that could give further direction to the market on Monday:
– China “Data Dump” (February)
・Domestic machinery orders (January)
– Malaysia Trade (February)
(Written by Jamie McGeever; Edited by Aurora Ellis)