Morning Bid: Asian stocks hit 2-year high; China, Indonesia set rates
Search our blog for articles and insights right here, just type your interest and dive into a world of knowledge.
Popular articles
Asian Markets Get a Boost Amid Global Calm
Investors in Asian markets are heading into Thursday in a buoyant mood, buoyed by a two-year high in Asian stocks and steady global markets that have kept volatility low and financial conditions loose. Despite the closure of U.S. markets on Wednesday, there were no significant liquidity concerns. The MSCI Asia ex-Japan index surged over 1%, reaching its highest level since April 2022. Similarly, the MSCI World index also climbed to a record high.
Key Events on Thursday's Calendar
Major events on the agenda include interest rate decisions from China and Indonesia, along with first-quarter GDP figures from New Zealand. The People's Bank of China is expected to maintain its benchmark lending rates, having already held its medium-term lending facility (MLF) loans steady earlier this week. While economic activity remains sluggish, there is increasing pressure to ease rates in the coming months.
Bank Indonesia is also anticipated to keep its key interest rate at 6.25%, influenced by the rupiah's recent decline to a four-year low against the U.S. dollar. This depreciation led the central bank to raise rates unexpectedly in April. Although inflation has stayed within the bank's target range of 1.5%-3.5% for almost a year, the U.S. Federal Reserve's 'higher for longer' approach and the dollar's strength have subdued hopes for rate cuts.
There is a possibility that New Zealand entered a mild technical recession in the first quarter. According to a Reuters poll, GDP is expected to grow by a mere 0.1%, following a 0.1% contraction in the last quarter of 2022.
Market Movements
If Wednesday's upward momentum in Asian stocks is to continue, China needs to show signs of recovery. While the MSCI Asia ex-Japan index has risen 12% since its mid-April low, China's blue chip CSI 300 index has remained stagnant. Conversely, Asian tech shares are thriving, inspired by Nvidia's strong performance. Hong Kong's Hang Seng tech index saw a significant 3.7% jump on Wednesday, marking one of its best days this year.
According to Goldman Sachs, U.S. financial conditions are at their loosest since March, and the Chicago Fed reports they are the loosest in two and a half years, fostering a bullish sentiment for Asian investors.
Currency Market Updates
In currency markets, the yen remains close to lows that recently prompted intervention from Tokyo. However, traders seem unbothered as one-month dollar/yen implied volatility dropped for the sixth consecutive day on Wednesday, reaching its lowest level since April 8.
