Asian markets choppy amid holidays and Chinese uncertainty

“The market has priced in the positive news (from China) and it is waiting for another strong cue,” said Shogo Maekawa, a global market strategist at JPMorgan Asset Management.

Either bright news from Japanese corporate earnings starting later in the month or a sign of economic recovery in Europe would push up the market further, he added.

On April 26, a slew of Japanese companies are scheduled to report their earnings, before the country enters the holiday, including Sony Corp, TDK Corp, Tokyo Electron, Hitachi Ltd and Komatsu Ltd..

Chinese stocks and bonds fell as investors wagered future monetary policy stimulus will be limited although steel and iron ore futures rose on Monday after a bad run last week.

The market was buoyed after a top decision-making body of the Communist Party on Friday said that support would come as China’s economy still faces “downward pressure”.

The world’s second-largest economy last week reported first quarter growth at 6.4 per cent as industrial production jumped sharply and consumer demand showed signs of improvement.

Benchmark Shanghai rebar prices rose 2.9 per cent shortly after the market opened. They settled up 1.6 per cent at $US562.08 ($73.81) a tonne.

The jump in steel prices was also driven by concerns over tight supply as the top steel-making city of Tangshan issued a second-level smog alert, effective from April 20 to April 25.

Meanwhile, analysts generally expect Tangshan to tighten its anti-smog measures in the coming months, which could curb supplies in the market.

“If Tangshan strictly implements production restrictions in May, we would see steel supply falling more sharply than demand,” Gu Meng, analyst from Orient Futures, said in a note.

“With increasing steel prices and therefore profit-margins at mills, prices of steel-making raw ingredients will also go up despite decreasing demand.”

In America, traders will look to a week full of company earnings releases, in particular from technology firms, before turning their focus to the U.S. economy, with first quarter gross domestic product data due Friday.

A number of large tech companies due to report earnings including Amazon, Facebook, Twitter and Microsoft among the heavy hitters on tap.

European bank earnings also kick into full gear with reports from Deutsche Bank, UBS, Barclays, Credit Suisse and Swedbank.

With corporate reporting season in full flow, investors are looking for clues to decide if the dovish policy pivot from the world’s central banks can shore up global growth enough to overlook earnings that are expected to contract.

The Bank of Japan, Bank of Canada, Bank of Russia, Sweden’s Riksbank and Bank of Indonesia are all set to make monetary policy decisions this week.

Reuters, Bloomberg

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