Asian markets are poised for a modestly positive shift as investors look beyond a slight uptick in the US Consumer Price Index (CPI), which initially sparked a hawkish reaction across various asset classes. Intriguingly, expectations for the Federal Reserve have shifted towards a more dovish stance, with approximately 155 basis points of monetary easing anticipated by year’s end, a notable increase from the 144 basis points projected prior to the CPI data release.
Attention is also being drawn to geopolitical dynamics, particularly in the oil sector, as recent developments saw heightened tensions in the Middle East following Iran’s seizure of a US oil tanker in the Gulf of Oman. Adding to the complexity, the UK is reportedly gearing up to join the US in conducting airstrikes against Houthi military targets in Yemen.
With the earnings season on the horizon, the focus is shifting to major financial institutions like BlackRock, Bank of America, JPMorgan, and Citigroup, who are preparing to announce their quarterly results. The market sentiment is buoyant in anticipation of these reports, especially as US markets hover near all-time highs. A strong start to the earnings season could further fuel equity rallies.
Additionally, the US Producer Price Index (PPI) is drawing attention, with markets appearing less concerned about minor surges in inflation data. Eyes are also on China’s inflation and trade figures for December, offering deeper insights into the country’s ongoing deflationary pressures and trade dynamics. However, it’s unlikely that this data will significantly alter China’s current delicate macroeconomic situation. Expectations for continued monetary easing and supportive measures in China remain high for the upcoming quarters.
© 2019 High Leverage FX - All Rights Reserved.
© 2019 High Leverage FX - All Rights Reserved.