Mar 18 2024: Asian markets saw gains on Monday, buoyed by encouraging economic data from China, while investors braced themselves for a busy week of central bank meetings that could signal shifts in monetary policies.
China’s industrial output rose by 7% annually in January and February, and retail sales increased by 5.5% compared to a year ago. However, concerns lingered over the real estate sector as property investment declined by 9%, highlighting the need for continued policy support.
Central banks across the globe, including those in the United States, Japan, UK, Switzerland, Norway, Australia, Indonesia, Taiwan, Turkey, Brazil, and Mexico, are scheduled to meet this week. While most are expected to maintain their current policies, there is potential for surprises.
The Bank of Japan (BOJ) is anticipated to make a significant decision on Tuesday, possibly ending eight years of negative interest rates and adjusting its yield curve control policy. The move comes amidst reports of substantial wage hikes in Japan, prompting discussions about a cautious approach to policy normalization.
Market expectations suggest the BOJ may opt for a gradual rate hike, with projections indicating a rate of 0.27% by December, compared to the current -0.1%. The central bank’s unscheduled bond buying operation on Monday aimed to prevent sharp yield increases and market volatility.
In currency markets, the yen weakened last week, with the USDJPY pair at 149.10, while the euro eased to $1.0887. Asian shares rallied, with Japan’s Nikkei jumping over 2%, and MSCI’s Asia-Pacific index gaining 0.3%. Chinese stocks also showed strength.
Looking ahead, the focus is on the Federal Reserve’s policy meeting on Tuesday and Wednesday, where no rate changes are expected, but attention is on the Fed’s stance on future rate cuts given recent inflation data. Goldman Sachs economist Jan Hatzius revised expectations for 2024 rate cuts, citing inflation trends.
Gold prices eased to $2,146.70 per ounce, and oil prices remained steady following positive demand outlooks and geopolitical tensions impacting supply.
Overall, the week promises to be eventful for financial markets, with central bank decisions and economic data shaping investor sentiment and market movements.
