China Data Release Marks Start of Significant Week, Investor Anxiety Peaks
Monday brings forth a significant wave of economic data releases across Asia, setting the tone for regional markets. The backdrop remains fragile following last week’s turbulence in global markets, with investors keeping a close eye on upcoming policy decisions in the United States and Japan.
Last week witnessed a notable downturn in Asian equity markets, marked by the MSCI Asia ex-Japan index’s 1.4% decline on Friday, its sharpest drop since January, culminating in its largest weekly loss in two months. Japan’s Nikkei 225 also experienced a substantial 2.5% loss, representing its most significant weekly decline this year. The resurgence in U.S. bond yields has dampened risk appetite, serving as a primary catalyst for the global stock sell-off.
The ICE BofA U.S. Treasuries index recorded a week-long decline, its most extensive since August, resulting in the most significant weekly drop since October. The two-year yield surged by 24 basis points, nearly equivalent to a quarter-point rate hike.
This week’s economic calendar for the Asia-Pacific region is packed with crucial data releases and central bank policy meetings. Notably, the Bank of Japan is set to commence its two-day meeting on Monday, with expectations running high for the first interest rate hike since 2007, signaling an end to the eight-year-long ‘negative interest rate policy’ (NIRP). Japan’s major companies have agreed to substantial wage increases for 2024, reinforcing the anticipation of historic policy shifts.
In addition to the Bank of Japan meeting, policy decisions from the central banks of China, Australia, Indonesia, and Taiwan are also scheduled, alongside inflation figures from Japan and New Zealand’s fourth-quarter GDP report.
Monday’s agenda is dominated by four key indicators from China, including business investment, retail sales, industrial production, and unemployment. While some green shoots of recovery are emerging in China, challenges persist. Despite indications of stabilizing capital outflows and recovering stocks, certain economic indicators paint a mixed picture. Notably, house prices experienced a sharp annual decline, while new bank lending growth hit record lows.
Expectations for Monday’s data releases include modest growth in business investment and industrial output in February, alongside a slight slowdown in retail sales compared to the previous month.
Key developments to watch on Monday include the ‘data dump’ from China for February, Japan’s machinery orders for January, and Malaysia’s trade figures for February. These releases will likely provide further insights into the economic trajectory of the region and may influence market sentiment accordingly.
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