By Jamie McGeever
(Reuters) – Here’s a glimpse into what’s on the horizon for Asian markets this week.
Starting off the last full trading week of 2024, Asia is buzzing with anticipation as Monday brings a flurry of crucial data from China. Investors are largely optimistic, hoping to keep the stock market’s bullish streak alive as global central banks hint at more relaxed monetary policies.
Last week was quite eventful, with several major central banks cutting interest rates. Australia’s central bank even hinted at future rate cuts, while China doubled down on its monetary and fiscal stimulus efforts. This has boosted risk-taking, despite some inclination to lock in profits with year-end approaching and Wall Street hitting record highs.
The outcome of several central bank meetings, including the Federal Reserve, will heavily influence market trends this week. The futures market strongly anticipates a quarter-point rate cut from the Fed. In Asia, all eyes are on the Bank of Japan.
The BOJ seems to be shifting gears, gradually moving away from its zero-interest rate policy. Last week’s stronger-than-expected ‘Tankan’ business survey might pave the way for a rate hike. Economist Phil Suttle is of the opinion that it’s the right move.
“The real question is whether the BoJ will have the confidence to proceed, or if Governor Kazuo Ueda might choose to hold off a bit longer,” Suttle noted on Friday. “Importantly, any steps towards normalizing rates would be seen as a success, not an issue.”
Over in South Korea, the won could face further selling pressure following President Yoon Suk Yeol’s impeachment on Saturday, adding another layer to a dramatic political crisis sparked by his unexpected martial law declaration on December 3.
Monday’s economic agenda in Asia is packed with potential market-moving announcements, particularly from China, which will release key economic indicators like industrial production, fixed asset investment, retail sales, house prices, and unemployment data.
These updates follow Beijing’s recent commitment to ramping up its budget deficit, issuing more debt, and loosening monetary policy to fuel economic growth. As U.S.-China trade tensions linger, U.S. Treasury Secretary Janet Yellen mentioned that potential sanctions on banks and tighter controls on “dark fleet” tankers are still on the table.
Beijing’s stimulus announcements have been well-received by investors since September. However, whether these measures will effectively navigate China out of its property sector slump and deflation, boost growth, and rekindle investment remains to be seen.
The official data expected on Monday should reveal whether industrial production and fixed asset investment maintained their growth rates last month, although retail sales growth might have slightly dipped.
House price data for November is also set for release, after October’s 5.9% year-on-year decline marked the sharpest drop in almost two decades.
Some key developments to watch out for on Monday include:
– November’s ‘China data dump’
– Manufacturing PMIs for Australia and India
– Japan’s October machinery orders
(Reported by Jamie McGeever; Edited by Bill Berkrot)
