Marketmind: China sets out economic, political, military vision

By Jamie McGeever

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

Asian markets may open strongly on Monday following Wall Street’s whoosh higher Friday. But a raft Chinese data and comments from U.S. Fed Chair Jerome Powell earlier in the week could shift sentiment quickly.

Investor-moving news will include the announcements of Monetary Policy decisions by Australia and Japan on Friday and Wednesday, respectively. Investors will have to deal with a torrent of news from China this weekend.

The annual session of the National People’s Congress, and reports from the finance ministry and state planner – the National Development and Reform Commission – have outlined Beijing’s broad goals and plans for the year ahead.

The government stated that it will aim to achieve growth of around 5% this year, a lower target than the previous year’s 5.5%. It will also take steps to minimize risks in the property sector, intensify its push to make China self-reliant in tech, and the central bank will provide ‘forceful’ support for economic development.

Perhaps most significantly, Beijing said it would boost defence spending by 7.2% – up on last year’s rate of increase and outpacing expected GDP growth – as Premier Li Keqiang called for the armed forces to boost combat preparedness.

(Graphic: MSCI Asia ex-Japan – weekly change – https://www.conservativenewsdaily.net/breaking-news/wp-content/uploads/2023/03/localimages/ChinaCPI.png)

Investors will get a better understanding of China’s economic recovery with this week’s release of trade and inflation data.

Investors as well as policymakers will pay close attention to the latest inflation numbers from South Korea and Thailand this week. A renewed increase in dollar prices could intensify FX-fueled inflationary forces in Asia, as the Fed appears to be on track for tighter policy.

Later in the week, Japan will be the focus of attention, as the fourth quarter GDP data are released on Thursday, and the BOJ policy decision is published on Friday. This was the last time Haruhiko Kuroda has been governor.

(Graphic: MSCI Asia ex-Japan – weekly change – https://www.conservativenewsdaily.net/breaking-news/wp-content/uploads/2023/03/localimages/MSCIASIA.png)

Asian stocks have generally underperformed their U.S. and global peers in recent weeks, but the underlying question still applies: How long can markets hold up – and volatility stay so low – in the face of soaring U.S. bond yields, rate and inflation expectations?

The global bond yields have risen sharply. There may be something that is just around the corner.

These are the three major developments that may provide additional direction for markets Monday.

– China’s National People’s Congress

– South Korea inflation (February)

– Euro Zone retail sales (January)

(By Jamie McGeever; Editing by Diane Craft)