Today: April 20, 2024
Today: April 20, 2024

Marketmind: BOJ takes center stage, China markets slump

Share This
LA Post: Marketmind: BOJ takes center stage, China markets slump
Reuters
Jamie McGeever
January 22, 2024

By Jamie McGeever

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

The Bank of Japan's policy decision - and perhaps more importantly, Governor Kazuo Ueda's press conference - is the main focus for Asian markets on Tuesday, as the deepening slump in Chinese and Hong Kong markets continues to unnerve investors.

While sentiment toward China's economy and markets is clearly deteriorating, the spillover to the rest of Asia may be contained to a certain extent by the more upbeat mood globally.

The S&P 500 on Monday hit a fresh record high for a second consecutive day while Japan's Nikkei 225 registered another 34-year peak. This helped limit the downside in Asia on Monday, and the MSCI Asia ex-Japan index slipped 0.6%.

The BOJ is not expected to alter policy, so the statement and Ueda's guidance will be intensely scrutinized for signals of when and how the 'normalization' process and eventual move away from negative interest rates will unfold this year.

Or if.

Recent inflation data has been soft, taking pressure off the BOJ to act. With inflation seemingly gliding back toward the BOJ's 2% target, traders are adjusting their rate expectations and Japanese assets are reacting accordingly.

Stocks are up almost 10% this month, the yen is sliding back toward the 150.00 per dollar area, and bond yields are significantly lower than they were a few months ago, despite being dragged higher in recent days by the rise in global yields.

The difference between investors' outlook towards Japan and China is night and day. Both may be over-cooked right now, but market momentum in both countries is strong and showing little sign of reversing.

China and Hong Kong shares slumped again on Monday. China's bluechip CSI300 Index skidded 1.6% to its lowest closing level in five years, the Shanghai Composite Index sank 2.7% - its biggest fall since April 2022 - and in Hong Kong the Hang Seng Index fell 2.3% to its lowest level in 14 months.

China's central bank stood pat on interest rates on Monday, as expected. But many traders and investors will be wondering how much longer policymakers can sit on their hands. The longer it does, the longer the stock market selloff might go on.

Beijing has said it will take more forceful and effective measures to support market confidence, state media CCTV reported on Monday, citing a cabinet meeting chaired by Premier Li Qiang.

Also on Monday, China's major state-owned banks moved to support the yuan, tightening liquidity in the offshore foreign exchange market while actively selling U.S. dollars onshore as equities slid, sources told Reuters.

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

- Japan monetary policy decision

- South Korea PPI (December)

- Australia business confidence (December)

(By Jamie McGeever; Editing by Deepa Babington and Bill Berkrot)

Popular

Live video of man who set himself on fire outside court proves challenging for news organizations

A man who set himself on fire outside the Manhattan courtroom where Donald Trump was on trial tested news organizations on how quickly they could respond to an incident and what to show viewers

Mandisa, Grammy-winning singer and 'American Idol' alum, dies at 47

Contemporary Christian singer Mandisa, who appeared on “American Idol” and won a Grammy for her 2013 album “Overcomer,” has died

Nuggets forward Michael Porter Jr. heads into playoffs against Lakers after trying week for family

Michael Porter Jr.'s teammates on the Denver Nuggets say their starting forward seems to be handling his family's troubles well as the team heads into the playoffs

Coyotes' move to Salt Lake City elicits opposing responses in 2 cities

NHL Commissioner Gary Bettman sat next to the former Arizona Coyotes owner in a downtown Phoenix hotel meeting room, trying to put a positive spin on the funeral for a franchise

Related

The drug war devastated Black and other minority communities. Is marijuana legalization helping?

Record Store Day celebrates indie retail music sellers as they ride vinyl's popularity wave

Panama Papers trial's public portion comes to an unexpectedly speedy end

UAW clinches watershed union victory at Volkswagen Tennessee factory

- Advertisement -
Advertisement: Limited Time Offer