Asia shares brace for rate meeting trifecta, China steps

Sydney, July 24 (BNA): Asian stocks on Monday prepared for a week of earnings excitement and central bank meetings that are likely to see interest rates rise in Europe and the United States, and possibly the end of a tightening monetary cycle in both.

Markets are fully priced in for quarter-point hikes from the US Federal Reserve and European Central Bank, so the focus will be on what Fed Chairman Jerome Powell and European Central Bank President Christine Lagarde say about the future, Reuters reports.

“For both, we expect this to mark the latest rally of the cycle, though neither Lagarde or Powell is likely to signal a peak is on its way, instead maintaining hawkish and data-driven tones,” 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 warrant the end of the tightening cycle.”

The odd man will be the Bank of Japan meeting on Friday and it is believed that it is likely to maintain its ultra-loose policy, but some Western banks speculate to adjust the attitude of yield curve control.

Reuters reported last week that BoJ policymakers would prefer to scrutinize more data to ensure wages and the inflation rate continue to rise before changing policy, though the decision may still be a close one.

The report slowed the yen and gave Japan’s Nikkei an early gain of 1.2%, while MSCI’s broader index of Asia-Pacific shares outside Japan fell 0.3%.

A Chinese Politburo meeting this week could see more stimulus announced, although investors have so far been disappointed by Beijing’s measures to support a faltering post-pandemic recovery.

Chinese blue chips fell 0.3%, while real estate developer Country Garden fell on debt concerns.

MI