By Jamie McGeever

(Reuters) – A look at the day ahead in Asian markets.

If this week has so far been strangely listless for Asian markets, that could be about to change suddenly on Thursday as investors brace for a deluge of top-tier economic data and policy events from across the continent.

Among the highlights, South Korea’s central bank sets interest rates, China releases its official manufacturing and service sector purchasing managers index reports for November, and India announces its third quarter growth figures.

The latest industrial production and retail sales data from both Japan and South Korea are on tap too, all of which could move their respective markets, especially currencies.

All else equal, the risks for Asian markets on Thursday may be tilted to the upside, even though stock markets around the world again struggled on Wednesday.

That’s largely because the ongoing fall in the dollar and U.S. bond yields continues to loosen financial conditions. In theory, this should boost animal spirits and the allure of riskier, higher-yielding assets.

U.S. financial conditions are the loosest since early September and have eased 100 basis points in a month, according to Goldman Sachs. The bank’s global and emerging market indexes ticked up a bit last week, but financial conditions are also looser by around 100 bps from a month ago.

U.S. rates futures markets are now pricing in more than 100 basis points of rate cuts next year starting in May, and the two-year Treasury yield is its lowest since July – it has slumped nearly 40 basis points this week alone.

The dollar on Wednesday hit its lowest since Aug. 10, and most Asian and regional currencies are taking advantage. Two of the best-performers are at the polar opposite ends of the ‘carry’ spectrum – the New Zealand dollar and Japanese yen.

The ‘kiwi’ dollar got an extra boost on Wednesday following the central bank’s ‘hawkish hold’ – policymakers kept the key cash rate at a relatively high 5.50%, but unexpectedly signaled that it could be raised again if inflation doesn’t moderate.

Remarkably, Japanese interest rates are still negative, but maybe not for much longer. Expectations the Bank of Japan will soon end its negative rate policy has pulled the yen up from the depths, and in the process, eased pressure on the central bank to support the currency via direct FX market intervention.

South Korea’s central bank is expected to keep its base rate on hold at 3.50% and leave it there until at least the middle of next year. But as the Reserve Bank of New Zealand showed on Wednesday, policymakers retain the ability to surprise.

Indian GDP growth, meanwhile, is expected to have slowed to a 6.8% annual rate in the July-September period from 7.8%, while Chinese factor activity likely contracted again in November but at a slower pace.

Here are key developments that could provide more direction to markets on Thursday:

– South Korea interest rate decision

– China official PMIs (November)

– India GDP (Q3)

(By Jamie McGeever; Editing by Josie Kao)

Read the full article here

Share.

Leave A Reply

Your road to financial

freedom starts here

With our platform as your starting point, you can confidently navigate the path to financial independence and embrace a brighter future.

Registered address:

First Floor, SVG Teachers Credit Union Uptown Building, Kingstown, St. Vincent and the Grenadines

CFDs are complex instruments and have a high risk of loss due to leverage and are not recommended for the general public. Before trading, consider your level of experience, relevant knowledge, and investment objectives and seek financial advice. Vittaverse does not accept clients from OFAC sanctioned jurisdictions. Also, read our legal documents and make sure you fully understand the risks involved before making any trading decision

Exit mobile version