Connect with us
Finance Digest is a leading online platform for finance and business news, providing insights on banking, finance, technology, investing,trading, insurance, fintech, and more. The platform covers a diverse range of topics, including banking, insurance, investment, wealth management, fintech, and regulatory issues. The website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website.
FINANCE

Marketmind: Rates start to bite

Published On :

By Jamie McGeever

(Reuters) – A look at the day ahead in Asian markets from Jamie McGeever.

Asian stocks on Tuesday come off the back of their worst day since June hoping for recovery, but vulnerable to an expected interest rate hike in Australia, potentially critical comments from Fed Chair Jerome Powell and deepening U.S.-Sino tensions.

Another close in the red for Wall Street on Monday won’t boost the likelihood of a rebound much either, as U.S. markets lurch to price in a ‘higher for longer’ Fed this year.

The pick of the Asian economic data and events calendar will be the Reserve Bank of Australia’s rate decision and subsequent guidance from policymakers.

The RBA is expected to deliver a fourth consecutive quarter-point interest rate hike to 3.35%, after inflation unexpectedly rose last year to a 33-year high of 7.8%.

However, figures on Monday showed retail sales are falling for the first time in a year, a sign that higher rates are maybe starting to bite.

In Japan, meanwhile, speculation on the next Bank of Japan governor is intensifying. According to the Nikkei newspaper, Japan’s government has sounded out BOJ Deputy Governor Masayoshi Amamiya to succeed Haruhiko Kuroda.

Many analysts see him as a pragmatic policymaker who will prefer tip-toeing toward any exit from the BOJ’s ultra-loose monetary policy rather than make sudden changes to a stimulus program he helped create.

And the yen is on the slide. It fell 1% on Monday and is down 3% since Friday, its biggest two-day fall in three years.

Yen vs dollar 2-day change: https://tmsnrt.rs/3jEdowD

Generally speaking, Asian markets are feeling the heat from the sudden U.S. interest rate outlook shift following January’s freakishly strong U.S. jobs report released on Friday.

The Fed’s implied ‘terminal’ rate in June is now well above 5.00%, the implied year-end rate is higher than current the fed funds range, markets are now pricing in only 20 basis points of easing this year and the two-year yield has spiked around 40 basis points.

This may be the tightening of financial conditions Fed Chair Powell and his colleagues are seeking. Or they may be irrational and unjustified market swings in response to one data point that will prompt a response from Powell when he speaks at the Economic Club of Washington on Tuesday.

The MSCI Asia ex-Japan index slumped 2.4% on Monday, its worst day since June last year, Chinese stocks had their worst day this year (blame Beijing-Washington tensions too) and Hong Kong tech stocks fell 3.6%.

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

– Fed Chair Powell speaks (Economic Club of Washington)

– Australia interest rate decision

China FX reserves (January)

 

(By Jamie McGeever; Editing by Josie Kao)

Continue Reading

Why pay for news and opinions when you can get them for free?

       Subscribe for free now!


By submitting this form, you are consenting to receive marketing emails from: . You can revoke your consent to receive emails at any time by using the SafeUnsubscribe® link, found at the bottom of every email. Emails are serviced by Constant Contact

Recent Posts