VOT Research Desk
Early on Friday, the Asia-Pacific region’s equity markets were at best sluggish due to a lack of significant data or events and varied macroeconomic indicators.
The S&P 500 Futures’ and the Wall Street benchmarks’ divergent performances may also have presented difficulties for the Asian traders.
The MSCI index of Asia-Pacific equities ex-Japan climbs by 0.5 percent intraday, reflecting the sentiment, but the Nikkei 225 of Japan posted marginal losses at the latest.
It’s important to note that the Coronavirus problems in China and the aggressive remarks from Federal Reserve officials challenged the optimists.
The bond market’s lack of liquidity and authorities’ denial of economic anxieties, however, kept buyers optimistic despite plans for additional intervention. However, the yield curve depicts the difficulties of a recession and puts downward pressure on stocks.
Two-year yields slowly increased to 4.46%, reverting some of the 33 basis point decline in yield caused by inflation last week to a low of 4.29%.
The greatest inversion since 1981 resulted from them being 69 basis points above 10-year rates, according to Reuters. In contrast to the predicted 2.7% growth and the 3.0% preceding rate, Japan’s headline National Consumer Price Index (CPI) increased by 3.7% YoY.
More significantly, the Core CPI, also referred to as the National CPI ex-Fresh Food, increased at the fastest rate since 1982. Haruhiko, the governor of the Bank of Japan (BOJ), maintains bulls in Tokyo and defends the easy-money policy.
On a related note, the market mood appeared to have been affected by North Korea’s missile launches and Thailand’s appeal to world leaders to set aside political differences and concentrate on tackling urgent global economic challenges including trade and inflation.
The US released mixed economic data on Thursday, but James Bullard of the St. Louis Federal Reserve and Neel Kashkari of the Minneapolis Federal Reserve questioned the market’s bets on the Fed’s anticipated easy rate hike in December, which in turn questioned optimism.
In the near future, a lack of significant data or events could keep traders on edge, but the bears are preparing to re-enter the market.
