Morning Bid: 2024 Bull Run Hits Final Lap – Is China’s ‘Data Dump’ About to Spark a Market Explosion?

With Monday’s monthly “China data dump,” Asia begins the last full trading week of 2024. As global central banks ease, investors are inclined to maintain the stock market’s upward trajectory.

Last week, a number of G10 central banks lowered interest rates or, in the case of Australia, hinted that they would do so shortly, while Chinese officials promised to go much further into the realm of fiscal and monetary stimulus.

Despite the need to take chips off the table before year-end and with Wall Street at all-time highs, this contributed to boost risk appetite.

Whether or not that continues this week will be largely determined by another round of G10 central bank decisions, including those from the Federal Reserve. Futures market pricing indicates that a quarter-point rate decrease by the Fed is almost probable, but the Bank of Japan will be the main focus in Asia.

The Normalising Policy

In contrast, the BOJ is gradually “normalizing” policy following years of zero interest rates. Could this week’s rate hike be sealed by last week’s better-than-expected ‘Tankan’ survey of business conditions?

Phil Suttle, an economist, believes it ought to. “At this point, it’s unclear if the BoJ is confident enough to act or if Governor Kazuo Ueda would rather wait for what? Crucially, rate normalization would be portrayed as an accomplishment rather than an issue,” Suttle wrote on Friday.

President Yoon Suk Yeol’s impeachment on Saturday, the most recent development in a spectacular crisis that began with his unexpected decision to declare martial law on December 3, may put additional selling pressure on the South Korean won.

There are a lot of potentially market-moving announcements on Monday’s Asian economic calendar, particularly the clutch of Chinese economic data like industrial production, fixed asset investment, retail sales, housing prices, and unemployment.

This comes days after Beijing announced it would loosen monetary policy, issue more debt, and increase the budget deficit in order to promote growth. U.S. Treasury Secretary Janet Yellen told Reuters on Friday that Washington won’t rule out bank sanctions and additional restrictions on “dark fleet” tankers as China braces for increased trade hostilities with the United States.

Since September, Beijing’s stimulus announcements have been greeted favorably by investors. However, it will take time to see whether they can boost growth, attract investment, and bring the economy out of a property sector bust and deflation.

Retail sales growth slowed marginally last month, while the annual rate of industrial production and fixed asset investment growth remained stable, according to official data that is slated to be released on Monday.