Morning Bid: 2024 bull run in home stretch, China ‘data dump’ eyed

By Jamie McGeever

(Reuters) – A look at the day ahead in Asian markets. 

Asia kicks off the final full trading week of 2024 with the monthly ‘China data dump’ landing on Monday, and with investors leaning toward keeping the stock market bull run going as central banks around the world go into easing mode.

Several G10 central banks last week cut interest rates or, in the case of Australia, signaled it may do so soon, and authorities in China pledged to dive even deeper into monetary and fiscal stimulus territory. 

This helped buoy risk appetite, despite the inclination to take chips off the table ahead of year-end and with Wall Street at record highs. 

Another wave of G10 central bank decisions, including from the Federal Reserve, will go a long way to determining whether that continues this week. A quarter point rate cut from the Fed is a near certainty, according to futures market pricing, while in Asia, the focus will be on the Bank of Japan.

The BOJ is heading in the other direction, slowly ‘normalizing’ policy after years of zero interest rates. Could the stronger-than-expected ‘Tankan’ survey of business conditions last week seal a rate hike this week? 

Economist Phil Suttle thinks it should. 

“The question now is whether the BoJ has the confidence to make the move or whether …(Governor Kazuo) Ueda might prefer to wait (for what?). Importantly, rate normalization would be presented as a success, not as a problem,” Suttle wrote on Friday.

Meanwhile, the South Korean won could come under further selling pressure after President Yoon Suk Yeol’s impeachment on Saturday, the latest twist in a remarkable crisis sparked by his surprise decision to impose martial law on Dec. 3.

Monday’s economic calendar in Asia is packed with potential market-moving releases, especially the clutch of Chinese economic indicators including industrial production, fixed asset investment, retail sales, house prices and unemployment.

This comes days after Beijing said it will increase the budget deficit, issue more debt and loosen monetary policy to support growth. China is girding for more trade tensions with the U.S., and U.S. Treasury Secretary Janet Yellen told Reuters on Friday that Washington won’t rule out sanctions on banks and further curbs on “dark fleet” tankers.

Investors have welcomed Beijing’s stimulus announcements since September. But only time will tell if they will pull the economy out of a property sector bust and deflation, revive growth, and draw investment back into the country.

Official data on Monday are expected to show that the annual rate of industrial production and fixed asset investment growth last month held steady, while retail sales growth dipped slightly.

House price data for November also will be released after October’s 5.9% year-on-year fall was the steepest decline in almost 20 years.

Here are key developments that could provide more direction to markets on Monday:

– China ‘data dump’ (November)

– Australia, India manufacturing PMIs (November)

– Japan machinery orders (October)