Marketmind: Rate expectations outweigh economic anxiety

Marketmind: Rate expectations outweigh economic anxiety

A preview of Asian markets for the coming day. output 

If Asian equities can avoid losing more than 1% on Friday, they should record their fourth consecutive weekly gain, which would be the longest winning run in more than a year.

From an interest rate standpoint, if not an economic one, the regional and global environment for Asian markets on Friday appears to be rather encouraging.

Japan and Britain entered recessions at the end of last year, according to data released on Thursday, and U.S. retail sales declined significantly last month compared to forecasts. However, that might result in somewhat looser monetary policy.

That's what happened on Wall Street and in Japan on Thursday; traders bet that Japan's unexpected plunge into recession will compel the Bank of Japan to proceed cautiously in normalizing monetary policy, and the Nikkei racked up another 34-year high to close to its all-time top.

The Nikkei is this year's stock market favorite, rising a startling 14% since January 1. The Nikkei's rise has been mostly driven by the yen's decline through 150.00 per dollar to within sight of its most recent 33-year low; however, on Thursday, it was overtaken by the global wave of non-dollar currency gain.

The impressive GDP numbers for Japan show that the country shrank by 0.4% annually between October and December, which was more than even the most pessimistic estimate from a Reuters survey of sixteen economists. In contrast, the consensus was +1.4 percent.

Treasury bond yields and the dollar were also negatively impacted by the unexpectedly poor U.S. retail sales figures on Thursday, but this was insufficient to prevent Wall Street from advancing for a second day.

The S&P 500 has climbed for 14 of the last 15 weeks, which is something it hasn't done since 1972, driven by the continued growth in tech and AI as well as strength in recent results.

The index is now flat for the week, which puts it in a good position to record a winning streak of 15 out of 16 weeks on Friday. In its existence, it has only accomplished this seven times, with the most recent instance occurring in 1972.

Overall, Asian markets are expected to close the week on a mostly optimistic note on Friday; perhaps, however, next week will bring a more gloomy tone. upon China's reopening.

On Friday, the Asian and Pacific economic calendar features the final estimate of Malaysia's fourth quarter GDP, Singapore's trade statistics, South Korea's trade and unemployment, Japan's tertiary manufacturing index, and New Zealand's manufacturing PMI.

The following significant events could give markets further guidance on Friday: output 

- January manufacturing PMI for New Zealand

- Unemployment in South Korea in January

- GDP of Malaysia (Q4, final)