Asian equities are poised for a robust trading session, bolstered by Wall Street‘s upbeat momentum, as evidenced by the steady advances of the S&P 500 and Nasdaq during the U.S. session. However, a key variable for Asia is China, where stocks have shown remarkable performance. This surge is attributed to a series of supportive measures, indicating that policymakers might aim to mobilize approximately 2 trillion yuan ($278.53 billion). This sum, primarily derived from the offshore accounts of state-owned enterprises, is speculated to be part of a stabilisation fund intended for onshore share purchases via the Hong Kong exchange link. Participants are vigilantly monitoring this development, as its confirmation or refutation could inject significant volatility into local equity markets. Should the package exceed expectations in scale and scope, it might trigger a substantial rally in equities, especially at the current levels.
Additionally, it’s important to highlight the volatility in the Asian fixed income markets, which experienced a downturn following the Bank of Japan’s press conference. Governor Ueda’s hints at a potential departure from the negative interest rate policy sparked this movement. In the currency markets, the Yuan notably stood out, gaining from China’s economic strategies. Looking forward, market focus will shift to upcoming U.S. data releases later in the week, including GDP figures and the core Personal Consumption Expenditures (PCE) index. These are critical for the Federal Reserve’s inflation evaluation and are expected to significantly impact short-term global market sentiment. In the Asia-Pacific region, the focus is on the Judo Bank preliminary PMIs for January and the December Westpac leading index, both of which are keenly anticipated.
