PBOC’s Inertia May Delay Response Despite Rising Adrenaline: Reuters
A look at the day ahead in Asian markets. The recent bold interest rate cut and easing signals from the Federal Reserve are still resonating in global financial markets. As a result, risk assets in Asia are expected to kick off the week on a positive note on Monday.
Japanese futures indicate a rise of over 1% at the opening, supported by the weakening yen last week. However, the increase in longer-dated U.S. Treasury yields could temper some of the optimism in the market.
The Bank of Japan’s decision to keep rates steady and its intention not to raise them soon led to the yen’s weakest daily close since September 4. This boosted Japanese Stocks. Meanwhile, the People’s Bank of China also held rates steady, contrary to expectations driven by China’s weak economic indicators and the Fed’s rate cut.
Despite signs of a weakening Chinese economy, the PBOC refrained from cutting rates. Foreign direct investment flows in China have plummeted by 31.5% year-on-year, indicative of waning investor confidence. However, the yuan has strengthened to a 16-month high on expectations of forthcoming stimulus measures.
The yen, which experienced volatility last week, closed the week with a 2% loss, its worst performance since April. Speculators are increasingly optimistic about the yen, with net long positions reaching an eight-year high.
In terms of economic data, Inflation figures from Malaysia and Singapore, flash PMIs from Australia and India, and New Zealand’s trade figures will provide direction to Asian markets. Additionally, the Reserve Bank of Australia will commence its two-day policy meeting.
Key developments for Monday include Australia and India’s flash PMIs for September and Malaysia’s Inflation data for August.
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Emma Collins, graduated in Financial Economics from the University of Chicago in the USA in 2016. She has since worked at an asset management firm in New York, where she specializes in investment strategies and portfolio management. Emma has a keen interest in financial analysis and has published several articles in renowned financial journals. Her work focuses on providing actionable insights to investors, and she is known for her forward-thinking approach to managing financial portfolios.