Jan 26 (Reuters) – A look at the day ahead in Asian markets from Jamie McGeever.
GDP data from South Korea and the Philippines topped Asian data for investors on Thursday, as the bullish sentiment that has lifted global stocks and risk assets this year showed signs of fading.
Some bleak signals from recent US earnings reports, a flurry of tech sector cuts and concerns about global growth are overshadowing hopes that the Fed and other central banks will take their foot off the monetary tightening pedal.
The Bank of Canada was the latest to signal a pause, saying it would likely hold off on further hikes on Wednesday after raising its key interest rate to 4.5%. Some central banks in Asia have followed suit in recent weeks.
Of course, it may be the end of the tightening cycle for many central banks, as the lagged effects of previous rate hikes have not yet been fully felt and policymakers expect growth to slow.
Investors will get a final picture of the health of two Asian economies, the Philippines and South Korea, on Thursday, before global markets get their first estimate of US growth in the October-December period later.
South Korea’s economy is expected to have shrunk by 0.3% in the fourth quarter of last year, the first quarterly contraction since the onset of COVID-19 in early 2020.
South Korea’s wealth is closely tied to the global technology sector and its largest trading partner, China. Both sail mixed waters.
However, Asian stocks are flying. MSCI’s broadest index of Asia-Pacific shares, ex-Japan, hit a seven-month high on Wednesday. Notably, the index is up 30% from its October low exactly three months ago, and has gained 11 of the past 13 weeks.
This could be due to a correction, and if it happens on Thursday, it will have more volume than the gains of the three days this week, as some Asian markets reopen after the Lunar New Year holidays.
China, however, is still closed.
Three key developments that could provide more direction to the markets on Thursday.
– South Korean GDP (Q4)
– Philippines GDP (Q4)
– US GDP (4th quarter preliminary estimate)
Reporting by Jamie McGever in Orlando, Florida. Editing by Josie Kao
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