Awaiting the flood of Chinese data, US production will slow down
by Jamie MacGyver
(Reuters) – A look at the day in Asian markets.
Relief from positive US and UK inflation appears to have survived this week, at least as far as equity markets are concerned, even as Treasury yields and the dollar continued to slide lower heading into the week’s final trading day.
Asian markets open on Friday against a global mix. U.S. bank earnings are beating expectations as yields ease and Fed Governor Chris Waller signaled his intention to cut rates on Thursday.
But more evidence is needed that global connectivity and inflation are not temporary, and investors are already nervous about the inauguration of US President-elect Donald Trump on Monday.
So investors in Asia could be forgiven for playing it safe by reducing exposure to riskier assets ahead of the weekend, especially since it’s a three-day holiday in the US where markets close on Monday for Martin Luther King Jr. Day.
But the monthly Chinese ‘data dump’ will end on Friday. Beijing will release December home prices, industrial production, fixed asset investment and retail sales, all for the fourth-quarter and full-year gross domestic product.
Citi’s China Economic Surprise Index is currently in a positive position as a result of a series of policy commitments and market stimulus measures announced since September. But that rise has faded, and the index is at its lowest in two months.
Can Friday Raft Indicators Stop Floating? Likely exports and new credit data released earlier this week, businesses and households threatened by tariffs may be on the stronger side as Trump ramps up activity before he takes office.
On the other hand, the broader trend suggests that negative shocks are more likely, with December marked by strong capital inflows, sluggish stock markets and the steepest fall in bond yields since December 2008.
Before Trump’s return to the White House, investors will be watching the TikTok saga for how good the US-Sino relationship is or otherwise.
The Chinese-owned video app, which is used by more than 170 million Americans monthly, is set to be banned on Sunday under a law that would allow it to acquire a non-Chinese owner. But Trump’s incoming national security adviser said on Thursday that the new administration would keep TikTok in the US if there was a viable settlement for the company.
Currency volatility in Asia is rising sharply after two surprise central bank policy changes this week from South Korea and Indonesia, and the Japanese yen ahead of a Bank of Japan rate hike next week.
