Asia stocks open higher in muted trade
With US investors buoyed by unexpectedly benign PCE readings, the Santa Rally sled has gained momentum.
Even though many in the region are still shaking off a bit of a holiday hangover, with several markets closed for Boxing Day, Asian stocks opened higher, riding a favourable wave from China's financial bond juggernaut. China remains a focal point after its central bank maintained the interest rate on the one-year medium-term lending facility at 2% on Wednesday, aligning with economists' forecasts. This cautious approach suggests the bank keeps its options open in light of potential escalations in trade tensions with the US.
Moreover, a recent government announcement detailed plans to broaden the investment scope of local government special bonds and increase their use as project capital, signalling a proactive fiscal stance.
Meanwhile, Bank of Japan Governor Kazuo Ueda's latest remarks influenced bullish regional sentiments. In a speech on Wednesday, he refrained from signalling a potential rate hike next month, emphasizing instead the importance of continuously monitoring economic risks. This stance has led traders to speculate about a possible delay in rate hikes, perhaps pushing expectations back to March, which nudged the yen lower.
Author
Stephen Innes
SPI Asset Management
With more than 25 years of experience, Stephen has a deep-seated knowledge of G10 and Asian currency markets as well as precious metal and oil markets.
