In This Article:
*
Asian stock markets: https://tmsnrt.rs/2zpUAr4
*
Nikkei gains 1.1%, S&P futures flat
*
Markets priced for 25bp hikes by Fed and ECB
*
Dollar firm on yen as BOJ seen on hold
By Wayne Cole
SYDNEY, July 24 (Reuters) - Asian shares on Monday braced for an action-packed week of earnings and central bank meetings that will likely see higher interest rates in Europe and the United States, and just possibly the end of the monetary tightening cycle in both.
Markets are fully priced for quarter-point hikes from the U.S. Federal Reserve and European Central Bank, so the focus will be on what Fed Chair Jerome Powell and ECB President Christine Lagarde say about the future.
"For both, we expect this to mark the last hike in the cycle, though neither Lagarde or Powell is likely to signal that the peak is in, instead retaining hawkish tones and remaining data-dependent," said analyst John Briggs at NatWest Markets.
"But activity and inflation data in both regions have softened enough, and are likely to soften further, to justify an end of the tightening cycle."
The odd man out will be the Bank of Japan which meets on Friday and is thought likely to keep its super-loose policy intact, but some Western banks are speculating on a tweak to its yield curve control stance.
Reuters reported last week that BOJ policymakers prefer to scrutinise more data to ensure wages and the inflation rate keep rising before changing policy, though the decision could still be a close call.
The report slugged the yen and gave Japan's Nikkei an early 1.1% gain, while MSCI's broadest index of Asia-Pacific shares outside Japan was barely changed.
China's Politburo meeting this week could see more stimulus announced, though investors have so far been underwhelmed by Beijing's actions.
Chinese blue chips dipped 0.2%, while property developer Country Garden slid on debt concerns.
HOST OF EARNINGS
EUROSTOXX 50 futures eased 0.2%, while FTSE futures were flat. S&P 500 futures and Nasdaq futures were little changed ahead of a wave of earnings this week.
A who's who of major companies are reporting including Alphabet, Meta, Intel, Microsoft, GE, AT&T, Boeing, Exxon Mobil, McDonald's, Coca Cola, Ford and GM.
"We believe the cloud behemoths Microsoft, Google, and Amazon will all deliver cloud upside over the next few weeks with an AI dominated focus that is markedly positively changing the direction of IT spending/projects in this environment," said analysts at Wedbush.
The results will have to be good to justify the S&P 500's earnings multiple of 20 and its gains of 19% year-to-date.