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Morning Bidding Market Focuses on Consolidation, Not Capitulation
Asian markets on Monday aim to start the week on an optimistic note with a week filled with top economic indicators and policy decisions, as another set of U.S. job growth data that shattered expectations on Friday triggered a sharp rally on Wall Street. Asian markets on Monday will focus on Japan's trade and current account data, Malaysia's industrial production and the Philippines' interest rate decision. Japan's Nikkei 225 index is set to rebound from Friday's 2% decline, which was the biggest drop since December 2022, after falling 3.4% for the week.
Jamie McGeever reported
(Reuters) - Asian Market Outlook.
Asian markets on Monday are aiming to start a week filled with top economic indicators and policy decisions in the region on an optimistic note, after U.S. job growth data once again smashed forecasts, sparking a sharp rally on Wall Street on Friday.
Monday's Asian market highlights are trade and current account data from Japan, industrial production from Malaysia and interest rate decisions from the Philippines.
Japan's Nikkei 225 is set to rebound from Friday's 2% drop, which was the biggest decline since December 2022, after falling 3.4% for the week. As always, the exchange rate and the intervening hypochondriac support for the yen from the Tokyo side of the equation will have a significant impact on the Japanese stock market.
Notably, risk appetite rebounded in U.S. equity trading on Friday, despite soaring bond yields, a weekly 4% rise in oil prices to just under $92 a barrel, and further weakening of expectations for U.S. interest rate cuts.
Geopolitical tensions also continue to ferment, pushing gold to a record high of US$2,330 per ounce on Friday.
Will the good feeling on Wall Street carry over to Asian markets on Monday? There are signs that stocks will be consolidating at higher levels, not taking profits.
Amid rising bond yields, the S&P 500 and MSCI All-World fell the most in three months, but by less than 0.8%. MSCI Asia ex-Japan, which is sensitive to rising U.S. yields, was more resilient, and was essentially flat for the week.
This week the Chinese government will release a series of key indicators including lending, trade and inflation.
U.S. Treasury Secretary Janet Yellen just wrapped up a four-day visit to China. Yellen said she and Chinese State Council Vice President of Agriculture He Lifeng agreed to start exchanges on "balanced" economic growth to eliminate U.S. concerns about China's manufacturing overcapacity.
She also told Arnie Lee that bilateral relations are now more stable because the two sides can have "tough" discussions.
Meanwhile, the Philippine central bank is widely expected to keep its key policy rate at 6.50% at its fourth meeting on Monday, with inflation rising for the first time in five months to 3.4% in February as the central bank warned the inflation outlook still faces upside risks.
This suggests that the Bangko Sentral ng Pilipinas (BSP) may be less inclined to lower interest rates before its major peers, especially the Fed. In a Reuters poll, seven out of 19 economists predicted the BSP would cut rates by 25 basis points to 6.25% in May or June.
Here are the major developments that could provide more曏 for Monday's market:
- Central Bank of the Philippines Policy Meeting
- Japan Trade, Current Account (February)
- Industrial Production in Malaysia (February)
(Reporting by Jamie McGeever; Editing by Bill Berkrot)
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