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Business Maverick

Asian stocks mostly gain in big central banks week: markets wrap

Asian stocks mostly gain in big central banks week: markets wrap
A pedestrian passes in front of a tube releasing a cloud of steam near the New York Stock Exchange in New Yor, on Monday, Jan. 7, 2019. (Photo: Michael Nagle/Bloomberg)

Stocks in Asia largely advanced at the start of a week packed with major central bank policy decisions, as China equities lagged due to traders holding out for signs of more policy support.

Japan stocks rose, boosted by a report late on Friday that said Bank of Japan’s officials see little urgent need to address the side effects of its ultra-loose monetary policy. Steelmaker Posco Holdings Inc. surged a record 24% after it reported that second-quarter profit beat estimates. The jump helped push the Kospi Index to rise 1% to head for the highest since mid June.

Things were less upbeat in Hong Kong and China as stocks declined. Chinese shares notched their worst week in four on Friday, despite a series of vows from Beijing to boost consumption and businesses. Global fund managers are bracing for prolonged gloom in markets though some hold out for strong policy support for the economy from an expected Politburo meeting. 

“The market is high on expectations (for stimulus) but have so far refrained from expressing a strong view in financial assets,” Chris Weston, head of research at Pepperstone Group Ltd., wrote in a note.

Meanwhile, concerns about the ability of conglomerate Dalian Wanda Group Co. to repay a maturing dollar bond may be alleviated after it raised 2.26 billion yuan ($314 million) from an asset sale. Worries about it defaulting had driven wild price swings in its notes and those of some peers in recent weeks. 

Contracts for US shares were mostly flat in Asia on Monday after the S&P 500 closed little changed on Friday and the Nasdaq 100 saw continued selling in technology companies following a disappointing batch of results.

The yen rose after weakening more than 2% last week, with the sharpest part of the move coming following the BOJ report. Most major currencies traded within narrow ranges versus the dollar on Monday.

Treasury yields were little changed across tenors in Asian trading hours. Yields on long-dated Australian and New Zealand bonds declined.

Eyes on central banks

Earnings and central bank decisions will be in focus this week. US heavyweights including Alphabet Inc., Exxon Mobil Corp. and Meta Platforms Inc. are all due to report, while in Asia investors will be watching names including Samsung Electronics Co., Rio Tinto Ltd. and Hitachi Ltd. 

Traders are positioning for the Fed and the European Central Bank to raise interest rates and to signal whether more hikes are likely. The BOJ is projected to stand pat, letting the rate gap with its peers widen as it waits for sustainable inflation. 

“The Fed should not signal another skip in September, as doing so for the June meeting really handcuffed the Fed at a time when it needed maximum flexibility,” Win Thin, global head of currency strategy at Brown Brothers Harriman & Co., wrote in a note. “Given how firm the labor market remains, we believe the right thing for the Fed to do is to emphasize a more data-dependent approach and stress that a skip in September should not be assumed.”  

In commodities, oil edged down after notching its fourth weekly gain amid tentative signs that global markets are tightening. Gold opened the week little changed after slipping against a stronger dollar on Friday. DM

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