March 6 (Reuters) – A preview of the day ahead in Asian markets from Jamie McGeever.
Asian markets are likely to open for business on Monday, after Wall Street rallied on Friday, but a series of Chinese economic data and remarks from US Fed Chairman Jerome Powell later in the week could quickly change sentiment.
Monetary policy decisions from Australia and Japan on Wednesday and Friday, respectively, will also be market moving events. Before that though, investors have a deluge of headlines out of China this weekend to digest.
The annual session of the National People’s Congress and reports from the Ministry of Finance and the state planner – the National Development and Reform Commission – set Beijing’s major goals and plans for the coming year.
On the economic front, the government said it would target growth this year of around 5%, down from last year’s target of 5.5%. It will also take steps to minimize risks in the real estate sector, step up efforts to make China self-sufficient in technology, and the central bank will provide “vigorous” support for economic development.
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Perhaps more importantly, Beijing said it would increase defense spending by 7.2% – up from last year’s rate of increase and expected GDP growth – as the Prime Minister Li Keqiang called on the armed forces to strengthen their combat readiness.
Beijing’s macro, military and geopolitical view for the next 12 months presented this weekend comes as investors get a better look at the progress of China’s economic reopening with the release of February data on trade, l inflation, credit and lending this week.
Inflation figures from South Korea, the Philippines, Thailand and Taiwan this week will be closely watched by investors and policymakers. With the Fed appearing to be on track to tighten policy further, a further rise in the dollar could intensify currency-fueled inflationary pressures in Asia.
Attention will turn to Japan later in the week, with the release of fourth quarter GDP data on Thursday and the BOJ’s policy decision on Friday, the latest under Haruhiko Kuroda’s government.
Asian equities have generally underperformed their US and global counterparts in recent weeks, but the underlying question remains valid: how long can markets hold out – and volatility stay so low – in the face of surging prices? US bond yields, rates and inflation expectations?
Global bond yields are also up sharply. Something might be about to give.
Here are three key developments that could give markets more direction on Monday:
– Chinese National People’s Congress
– Inflation in South Korea (February)
– Euro Zone retail sales (January)
By Jamie McGeever; Editing by Diane Craft
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