🧐 ProPicks AI October update is out now! See which stocks made the listPick Stocks with AI

Morning Bid: Optimism rising high, soft landing on track

Published 07/07/2024, 05:48 PM
Updated 07/07/2024, 05:55 PM
© Reuters. Passersby walk past an electric monitor displaying the Japanese yen exchange rate against the U.S. dollar outside a brokerage in Tokyo, Japan October 4, 2023. REUTERS/Issei Kato/File photo
UK100
-
US500
-
IXIC
-
MSCIEF
-
MIWO00000PUS
-

By Jamie McGeever

(Reuters) - A look at the day ahead in Asian markets.

Investors start the new week in ebullient mood after last Friday's U.S. jobs figures kept the "soft landing" story on track, lowering the dollar and bond yields, and adding fuel to the relentless "risk on" rally in stocks.

Most of the world's main equity markets are at record or multi-year peaks, and there doesn't seem to be much on the immediate horizon to derail them.

Profit-taking, quarter-end position adjustments, worries over valuations or market concentration, and political or policy jitters have all come into play recently. But the overpowering "buy the dip" mentality has ensured any pull backs have been shallow and brief.

European politics may have some influence on early Asian trading on Monday - France was on course for a hung parliament in Sunday's election, with a leftist alliance unexpectedly taking top spot ahead of the far right in a major upset that was set to bar the far right, eurosceptic National Rally party from running the government.

Asia opens in good shape. Japan's Nikkei 225 index scraped a new record high of 41,100 points on Friday and has risen some 7% in just two weeks, and the MSCI Emerging Market and MSCI Asia ex-Japan indices are at their highest in two years.

More broadly, the MSCI World, S&P 500, and Nasdaq all hit record highs last week, and last month euro zone stocks hit a 23-year high. Britain's FTSE 100 hit a record high in May.

Monday's Asia and Pacific calendar is light, with the spotlight on bank lending, trade and current account, and overtime pay figures from Japan. Philippines central bank governor Eli Remolona and finance secretary Ralph Recto speak at a business forum on Monday too.

Japan's overtime pay isn't usually seen as a top-tier indicator, but it is worth watching this month.

A recent labor union survey showed that firms offered to hike pay by 5.1% on average this year, the biggest increase in 33 years and far outpacing inflation now hovering around 2%. But figures on Friday showed that household spending plunged in May as higher prices continued to squeeze consumers' purchasing power.

This is a headache for Bank of Japan policymakers who want to raise interest rates and have put great store on rising wages, but are worried about the impact on an economy that's far from firing on all cylinders.

Looking ahead, the most market-sensitive events in Asia this week are likely to be central bank policy meetings in New Zealand, South Korea and Malaysia, and producer and consumer price inflation figures from China.

The main market drivers globally are likely to be U.S. CPI inflation on Thursday, and two days of Congressional testimony by Fed Chair Jerome Powell set for Tuesday and Wednesday.

Here are key developments that could provide more direction to markets on Monday:

- Japan wage growth (May)

© Reuters. Passersby walk past an electric monitor displaying the Japanese yen exchange rate against the U.S. dollar outside a brokerage in Tokyo, Japan October 4, 2023. REUTERS/Issei Kato/File photo

- Japan current account (May)

- France general election

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.