Marketmind: China rate decision set to disappoint
By Jamie McGeever
(Reuters) — A look at the day ahead in Asian markets.
An interest rate decision in China kicks off the week in Asia on Monday with investors hoping — forlornly, perhaps — that the central bank will provide some much-needed relief for the country's sluggish economy and creaking markets.
This will be followed by the Bank of Japan's policy decision and guidance the next day — an equally-anticipated event, but for different reasons — meaning trading activity and volume should start the week on a strong note.
Especially in foreign exchange.
The Chinese yuan and Japanese yen both go into their respective central bank meetings on the defensive against the dollar. The yuan last week touched a two-month low and the yen's accumulated year-to-date losses reached 5%.
Indeed, out of nine Asian currencies only the Indian rupee is up against the dollar this year. And even then, only by a whisker.
The dollar is also up against every one of its rival G10 currencies even though the Fed is still expected to cut rates by more than any other major central bank in the world this year, despite the recent pullback.
Asian stocks should have a decent spring in their step on Monday after the S&P 500 hit a new all-time high on Friday.
The rise in global stocks was sparked by Taiwanese chipmaker Taiwan Semiconductor Manufacturing (TSMC), the world's largest contract chipmaker. On Thursday it projected more than 20% growth in 2024 revenue on booming demand for high-end chips used in AI.
The MSCI Asia Pacific ex-Japan index rose more than 1% on Friday but still fell for a third consecutive week, and is down more than 5% year-to-date.
Chinese stocks are languishing around five-year lows, foreigners are pulling money out of the
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