(Bloomberg) — Shares in Asia advanced ahead of an expected cut to China’s 1-year medium-term lending facility and in the wake of Taiwan’s election at the weekend. (Bloomberg) — Shares in Asia advanced ahead of an expected cut to China’s 1-year medium-term lending facility and in the wake of Taiwan’s election at the weekend. Shares climbed in South Korea and Japan, after the latter hitting their highest since 1990 last week as decades-long deflation fades and a weak yen supports exporter earnings.
Contracts for Hong Kong stocks pointed to a rise, while US stock futures declined during Asian trading after the S&P 500 closed little changed Friday. Prices paid to US producers extended their retreat in December, solidifying bets of a March Federal Reserve rate cut. In Asia, the People’s Bank of China will be in the spotlight as it is expected to trim its MLF rate by 10 basis points, breaking a pause stretching back to last August.
Last week’s confirmation that China remains in deflation adds to the case for further monetary easing, according to Commonwealth Bank of Australia strategists, including Joseph Capurso. “However, we judge the market has more or less priced in an imminent PBoC rate cut,” the strategists wrote in a note. “Together with continued support at the daily fix, we do not expect a rate cut announcement to have much impact on USD/CNH.
” Read More: Taiwan Election Result to Force Compromise in Boost for Markets Investors will also be monitoring Taiwan assets after the Democratic Progressive Party won the presidential election and the more China-friendly Kuomintang gained too few seats to control the assembly. China has so far had a muted response to the weekend’s results. “The market is likely to shift focus back to fundamental factors of a better semiconductor industry outlook and lower global yields, which is more likely to increase foreign flows and be supportive for TWD, in our view,” Citi analysts, including Adrienne Lui, wrote in a note.
The steady start in Asia comes as a gauge of global equities has gotten off to a rocky start this year after last quarter’s 11% rally — the biggest gain in three years — amid euphoria over AI and bets the global rate hiking cycle is done. There is no cash trading of Treasuries due to a holiday in the US. The dollar gained against all of its Group-of-10 peers.
Producer Prices Fall Bond markets have been whipsawed as key inflation and jobs data paints a mixed picture on the US economy. Treasuries rallied on Friday after the US producer price index for final demand fell for a third straight month. Swaps traders see an almost 80% chance of Fed’s easing cycle will start March, up from about 62% earlier last week, according to data compiled by Bloomberg.
The market is pricing almost 170 basis points in rate cuts this year which “continues to strike us as unreasonably aggressive, especially as the real sector data may show the US economy continued to grow above the 1. 8% pace in Q4 23, which the Fed estimates is the non-inflationary speed limit,” said Marc Chandler, chief market strategist at Bannockburn Global Forex. “The real sector data in the coming days may encourage some paring back of the aggressive wagers.
” After the big fourth-quarter rally, investors are shifting gears to what companies have to show for it in their earnings scorecards. Wall Street’s biggest banks on Friday took turns calling an end to the record run for their biggest source of revenue. Wells Fargo & Co.
surprised analysts by predicting a 9% drop in net interest income for 2024, while Citigroup Inc. forecast a modest drop this year. Even JPMorgan Chase & Co.
, which sees its 2024 haul holding up at 2023 levels, predicts it will drop off over the course of the year. Along with more US earnings reports, investors this week will be focused on inflation readings in Germany and the UK, as well as a swath of political leaders and officials including Chinese Premier Li Qiang attending the annual World Economic Forum at Davos, Switzerland. A speech by Federal Reserve Governor Christopher Waller, after officials last week attempted to temper any expectation of a looming rate cut, will also be closely watched.
Oil declined after it climbed on Friday as the US and its allies launched airstrikes against Houthi rebels in Yemen. WATCH: Mohamed El-Erian, a Bloomberg Opinion columnist, sees inflation at the CPI level getting stuck at 3%, challenging the Federal Reserve. Source: Bloomberg Some key events in markets this week: China medium-term lending facility rate and volume, Monday World Economic Forum in Davos begins, with this year’s theme “Rebuilding Trust,” Monday Eurozone industrial production, Monday Eurozone finance ministers meet in Brussels, Monday Germany to release 2023 growth figures, including an estimate for the fourth quarter, Monday Iowa Republican caucuses, the first nominating contests for the 2024 US presidential election, Monday Japan PPI, Tuesday Germany CPI, ZEW survey expectations, Tuesday UK unemployment, Tuesday US Empire Manufacturing, Tuesday Goldman Sachs Group Inc.
, Morgan Stanley to report earnings, Tuesday Federal Reserve Governor Christopher Waller speaks, Tuesday China GDP, property prices, retail sales and industrial production, Wednesday Bank Indonesia rate decision, Wednesday Eurozone CPI, Wednesday UK CPI, Wednesday US retail sales, industrial production, business inventories, Wednesday Federal Reserve issues Beige Book survey, Wednesday European Central Bank President Christine Lagarde speaks at Davos, Wednesday New York Fed President John Williams speaks, Wednesday Australia unemployment, Thursday Japan industrial production, Thursday US housing starts, initial jobless claims, Thursday Japan CPI, Friday European Central Bank publishes account of December policy meeting, Thursday Atlanta Fed President Raphael Bostic speaks, Thursday US existing home sales, University of Michigan consumer sentiment, Friday US Congress faces deadline to pass spending agreement before part of federal government shuts down, Friday San Francisco Fed President Mary Daly speaks, Friday Here are some of the main moves in markets: Stocks S&P 500 futures fell 0. 1% as of 9:36 a. m.
Tokyo time. The S&P 500 was little changed on Friday Nasdaq 100 futures fell 0. 1%.
The Nasdaq 100 was little changed Hang Seng futures rose 0. 2% Japan’s Topix rose 0. 5% Australia’s S&P/ASX 200 was little changed Currencies The Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.
0949 The Japanese yen fell 0. 2% to 145. 11 per dollar The offshore yuan was little changed at 7.
1870 per dollar The Australian dollar was little changed at $0. 6687 Cryptocurrencies Bitcoin fell 0. 6% to $42,255.
51 Ether fell 1. 1% to $2,498. 2 Bonds Australia’s 10-year yield was little changed at 4.
08% Commodities West Texas Intermediate crude fell 0. 2% to $72. 53 a barrel Spot gold was little changed This story was produced with the assistance of Bloomberg Automation.
–With assistance from Joanna Ossinger. More stories like this are available on bloomberg. com ©2024 Bloomberg L.
P. .
From: bloombergquint
URL: https://www.ndtvprofit.com/markets/asia-set-for-mixed-start-after-taiwan-elections-markets-wrap
