Asia marts strengthen

- Advertisement -

SYDNEY- Asian share markets firmed on Monday as the Nikkei reached another new high and investors braced for a week packed with central bank events and major data that will refine market wagers for when interest rates will start falling.

All eyes will be on Federal Reserve Chair Jerome Powell when he testifies before lawmakers on Wednesday and Thursday, though analysts assume he will stay in wait-and-see mode on policy given recent upside surprises on inflation.

The February payrolls report on Friday could also shift the calculus with forecasts favoring a still-solid rise of 200,000 after January’s barnstorming 353,000 jump.

- Advertisement -

The European Central Bank meets Thursday and is considered certain to keep rates at 4.0 percent , but also lower its outlook for inflation in a nod to eventual cuts.

“The focus will be on the changes to the macro projections and on the tone, which we expect to be dovish but cautious — in a risk-management posture that should point to June for the first move lower in rates,” wrote analysts at NatWest Markets in a note.

“100 basis points still seems the right amount of cuts for this year,” they added. “While the ECB is not pressed to act with urgency and may prefer to start with a 25bp clip, instead of our central scenario of a first 50bp cut in June.”

The Bank of Canada is likewise expected to stay on hold this week, with a first cut seen in June or later.

Other events of note include President Joe Biden’s State of the Union address on Thursday, the Super Tuesday US primaries and China’s National People’s Congress (NPC) meeting starting on Tuesday which might flag new stimulus measures.

Chinese blue chips were off 0.2 percent awaiting some concrete news on any measures.
MSCI’s broadest index of Asia-Pacific shares outside Japan firmed 0.4 percent , after snapping a five-week winning streak with a slight drop last week.

Japan’s Nikkei climbed 0.8 percent to break 40,000 for the first time, having risen for five weeks straight. Tech darling Tokyo Electron has surged 55 percent since the start of the year.

An upbeat report on fourth quarter capex out Monday suggested GDP could be revised to positive from negative, meaning Japan was not in recession after all. That added to speculation a strong wage round could lead the Bank of Japan to end negative rates in April. – Reuters

Author

- Advertisement -

Share post: