2023-10-09 21:45:00
Financial markets columnist Jamie McGeever provides an outlook for Asian markets for the day ahead. Asian markets are expected to open higher on Tuesday, after a curious day in global markets on Monday, which saw virtually all asset classes advance despite geopolitical tensions and uncertainty sparked by violence in Israel and Gaza.
Safe-haven gold jumped 1.6% to its best day in five months and oil posted its biggest gain in six months, while the dollar gave up all its initial gains and Wall Street recovered from 1% losses to finish comfortably in the green.
The rebound in risk sentiment is largely due to comments from two Fed officials that the recent rise in long-term bond yields and tightening financial conditions mean the Fed may be done raising interest rates. ‘interest.
Dallas Fed President Lori Logan said “there may be less need to raise the federal funds rate” and Fed Vice Chairman Philip Jefferson hinted at the need to the central bank to “proceed with caution” with any further increase in the key rate.
US implied rates fell across the curve, the dollar weakened and risk assets rose. The U.S. bond market was closed Monday for Columbus Day, but futures were traded, and the 10-year Treasury futures contract posted its biggest rise since March.
Falling U.S. yields, implied rates and the dollar exchange rate provide a much more favorable set of conditions for Asian and emerging markets than those initially seen on Monday following events in Israel and Gaza over the weekend -end.
The MSCI Asia ex-Japan index even managed to register a slight gain and has now risen for three consecutive days, its best performance in over a month.
The calendar of economic data and events in the Asia-Pacific region is quite light on Tuesday, with the latest Japanese current account figures, Australian business confidence indices and Philippine trade balance data as the main highlights.
The annual meetings of the IMF and the World Bank in Morocco begin on Tuesday, attended by Janet Yellen, US Treasury Secretary, Christine Lagarde, President of the European Central Bank, and many other leading international policymakers.
Markets will be sensitive to whether Raphael Bostic, Christopher Waller, Neel Kashkari and Mary Daly stick to the line given by their colleagues on Monday.
A more hawkish tone could dampen the market enthusiasm generated by Lorie Logan and Philip Jefferson.
China’s troubled real estate sector is once again in the spotlight. Country Garden, the country’s largest private lender, may soon announce a plan to restructure its offshore debt, local media reported Monday, as it faces another looming debt deadline.
Here are the main developments that could steer markets on Tuesday:
– IMF and World Bank meetings in Marrakech (Morocco)
– Japan current account (August)
– Bostic, Kashkari, Waller et Daly of the Fed s’expriment
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