Asian markets may see a choppy week ahead
Jamie McGeever takes a look at the day ahead in Asian markets.
Asian stocks are poised to make a fifth weekly rise after a strong rally on Wall Street after upbeat U.S. economic growth data on Thursday.
After nearly three years of COVID 19 restrictions in China, investors are already positive about the economic re-emergence of the country, and are pouring record sums into emerging market debt and equity funds, according to Bank of America.
The fourth quarter U.S. GDP figures on Thursday gave investors hope that the Fed can make a soft landing for the U.S. economy.
There are no major Asian economic indicators or corporate earnings releases on Friday to drive market direction, and volumes will be relatively light due to China still being closed for Lunar New Year.
Thursday's feel good factor will be free to filter into Friday unless investors indulge in a bit of profit-taking, although surprisingly weak revenue forecasts from Intel after the closing bell on Thursday may sour sentiment.
It will take a fall of 1.7% - something not seen in almost three months - for the MSCI Asia ex-Japan index to end the week in the red.
It rose to a seven-month high overnight, up more than 30% from the October low, and has risen in 11 of the last 13 weeks.
Hong Kong's Hang Seng is open again after the Lunar New Year holidayLunar New Year holiday, and it has a 2.37% surge to a 10 month high on Thursday.
If MSCI Asia ex-Japan's 31% rise since October low is remarkable, the Hang Seng 55% rally is extraordinary, and the Hang Seng tech index's 75% surge over the same period is another level of staggering.
The Japanese data point in an otherwise light calendar on Friday is the Tokyo inflation figures, which are expected to show prices excluding fresh food rising in January at an annual 4.2% pace, the fastest since 1982.
It is worth noting that this measure of annual inflation was negative for most of 2021 and only 0.2% a year ago. Three key developments that could give more direction to markets on Friday are: