Janice R. Andrews
Asian stock markets went up and down on Monday because China’s mixed economic signs made people less likely to expect the Federal Reserve to cut interest rates. After China released weak economic figures over the weekend, Hong Kong stocks fell the most in a week. This made people worry about whether the Chinese government will take stronger steps to boost growth.
The markets weren’t as busy because Japan, South Korea, and mainland China were all closed for holidays. The market is now focusing on the Federal Reserve’s upcoming policy decision along with monetary moves from Brazil, South Africa, the UK, and Japan. This is because the U.S. central bank’s long-awaited easing cycle is taking center stage. It’s up to investors to decide whether the Fed will cut rates by 25 or 50 basis points. In the meantime, the Bank of Japan is likely to keep rates the same after upsetting the market by raising them at their last meeting.
The yen did the best out of the major currencies; it got stronger, while the U.S. dollar got weaker after someone tried to kill former President Donald Trump. An talk with Katrina Ell, Director of Economic Research at Moody’s Analytics, told Bloomberg that there is a lot of worry about the Fed’s easing cycle and how fast it will happen.
After last month’s market chaos, the Bank of Japan’s (BOJ) next move is still very important. Traders are still being careful ahead of regional economic data and Indonesia’s central bank policy decision, which are coming up just before the Fed meeting. Clear communication from the BOJ will be important to help guide market players.
Global investors looking for good returns have become more interested in Southeast Asian markets as rate cuts are expected. China’s economy, on the other hand, is very different. In August, factory output, spending, and investment were all lower than predicted, and the unemployment rate hit its highest level in six months. The People’s Bank of China has hinted at more steps that will be taken to fight decline and boost economic trust.
Treasury prices have gone down for the second week in a row because of renewed hopes for a big U.S. interest rate cut of 50 basis points. The price of two-year notes ended the day at its lowest level in two years. Bloomberg data shows that traders have priced in about 110 basis points of Fed rate cuts by the end of the year.
Martin Whetton, Head of Financial Markets Strategy at Westpac Banking Corp. in Sydney, said, “It’s going to be a big week.” “Based on recent data, at the very least a dovish cut should be expected. This should support prices on the market right now.”
