In This Article:
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Asian stock markets: https://tmsnrt.rs/2zpUAr4
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Fed seen hiking 25bp this week, ECB and BOE by 50bp
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Tech giants lead host of earnings results
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China shares up as holiday travel surges
By Wayne Cole
SYDNEY, Jan 30 (Reuters) - Asian shares turned cagey on Monday ahead of a week that is certain to see interest rates rise in Europe and the United States, along with U.S. jobs and wage data that may influence how much further they still have to go.
Earnings from a who's who of tech giants will also test the mettle of Wall Street bulls, who are looking to propel the Nasdaq to its best January since 2001.
Asia has been no slouch either as China's swift reopening bolsters the economic outlook, with MSCI's broadest index of Asia-Pacific shares outside Japan up 11% in January so far at a nine-month high.
The index was off 0.2% on Monday with markets mixed across the region. Japan's Nikkei went flat, while Taiwan jumped 3.1%.
The Nikkei newspaper reported Renault was to lower its share holding in Nissan to 15%, while the latter would invest in Renault's EV business.
Chinese blue chips climbed 1.1% after returning from the holidays. Beijing reported Lunar New Year travel trips inside China surged 74% from last year, though that was still only half of pre-pandemic levels.
S&P 500 futures and Nasdaq futures both eased 0.3%, while EUROSTOXX 50 futures and FTSE futures dipped 0.2%.
Investors are confident the Federal Reserve will raise rates by 25 basis points on Wednesday, followed the day after by half-point hikes from the Bank of England and European Central Bank, and any deviation from that script would be a real shock.
Just as important will be the guidance on future policy with analysts expecting a hawkish message of inflation is not yet beaten and more needs to be done.
"With U.S. labor markets still tight, core inflation elevated, and financial conditions easing, Fed Chair Powell's tone will be hawkish, stressing that a downshifting to a 25bp hike doesn't mean a pause is coming," said Bruce Kasman, chief economist at JPMorgan, who expects another rise in March.
"We also look for him to continue to push back against market pricing of rate cuts later this year."
There is a lot of pushing to do given futures currently have rates peaking at 5.0% in March, only to fall back to 4.5% by year end.
EYEING APPLE
Yields on 10-year notes have fallen 33 basis points so far this month to 3.50%, essentially easing financial conditions even as the Fed talks tough on tightening.
That dovish outlook will also be tested by data on U.S. payrolls, the employment cost index and various ISM surveys.