By Vivek Kumar
Moving Markets Today: Asia Stocks Drop Amid Light U.S. Holiday Trading, China’s Central Bank Keeps Lending Rate Unchanged; Focus on Q3 Earnings and China GDP
On Monday, with U.S. holidays and Wall Street taking a break for Martin Luther King Day, there has been a slow start in Asian markets. Chinese stocks declined as the People’s Bank of China kept the lending rate unchanged. Oil prices dropped due to concerns about potential disruptions in the Middle East after U.S. and British forces intervened to prevent Houthi militia attacks on ships in the Red Sea. In the coming days, attention will turn to U.S. retail sales data and speeches by Federal Open Market Committee (FOMC) officials, contributing to uncertainty in the interest rate outlook. Investor caution persists as they await key economic indicators such as Chinese GDP data and Japanese inflation, along with Beijing’s response to the Taiwan presidential election. Here are five key takeaways for your day.
China’s Central Bank Holds Medium-Term Lending Facility Rate at 2.5%
The People’s Bank of China kept a significant interest rate steady, surprising expectations for additional economic stimulus. The rate for one-year loans to financial institutions, totaling almost 1 trillion yuan (known as the medium-term lending facility), remained at 2.5 percent. Investors eagerly await this week’s data, including December’s industrial output, investment, and retail sales, along with fourth-quarter gross domestic product figures, to gauge whether further economic support is needed.
U.S. Congress Introduces Stopgap Bill to Prevent Shutdown; U.S. Thwarts Anti-Ship Missile
On Sunday, leaders from both the Democratic and Republican parties in the U.S. Congress introduced a short-term spending bill. This measure is designed to avoid a partial government shutdown, ensuring the ongoing operation of federal agencies until March.
In the Southern Red Sea on Sunday, a U.S. fighter aircraft skilfully thwarted an anti-ship missile directed at an American Navy vessel. The missile, originating from territory held by Houthi rebels in Yemen, was aimed at the USS Laboon but was successfully intercepted “near the coast of Hudaydah,” as reported by the U.S. Central Command.
UK Housing Market Shows Promising Momentum in Early 2024: Rightmove Survey
UK’s housing market had its strongest start to the year since 2020, according to Rightmove’s recent survey. The data, covering homes listed between Dec. 3 and Jan. 6, showed a remarkable 1.3% increase in average asking prices compared to the previous month. This surge, more than double the usual rise for this period, suggests a potential easing of the sector’s earlier slowdown due to increased demand in January.
What’s Coming Up
As earnings season unfolds, watch for updates from major players like Goldman Sachs and Morgan Stanley. In the U.S., focus is on retail sales and the Iowa caucus this week. The key economic themes for 2024, namely inflation and growth, will remain in the spotlight. China’s Q4 GDP figures, anticipated at 1% for the quarter and 5.2% year-on-year, will be disclosed on Wednesday. In the UK, improving inflation prospects will be clarified with Wednesday’s release of the consumer price index and producer price index figures. U.S. markets take a break on Monday for Martin Luther King Day, resuming with the tail-end of major bank reports and results from non-financial businesses. Keep an eye on the online food delivery sector, with insights expected from Ocado, Just Eat Takeaway, and Deliveroo.
Asian Markets Waver as China Reacts to Unchanged Interest Rates
The Asia-Pacific region, excluding Japan, saw MSCI’s index dip by 0.2%, following a 0.8% loss last week. Hong Kong’s Hang Seng remained stable after a 0.8% drop, and China’s CSI 300 fell by 0.1%. In contrast, Japan’s Nikkei 225 rose by 0.6%, reaching a new 34-year high. South Korea’s Kospi recorded a 0.1% decrease. The dollar strengthened against the yen to 145.08, nearing last week’s peak. Non-yielding gold held at $2,050 per ounce after a 1% increase on Friday. Oil prices, influenced by Red Sea disruptions, saw Brent ease to $78.10 per barrel, and U.S. crude fell to $72.45 per barrel, reflecting concerns about this year’s demand.
