By Jamie McGeever
(Reuters) – A look at the day ahead in Asian markets from Jamie McGeever.
Spurred by a solid rally on Wall Street after upbeat U.S. economic growth data on Thursday, Asian stocks on Friday are set to continue their remarkable run and chalk up a fifth weekly rise in a row.
Investors are already feeling positive about China’s economic re-emergence from nearly three years of COVID-19 restrictions, pouring record sums into emerging market debt and equity funds, according to Bank of America.
Fourth quarter U.S. GDP figures on Thursday further fueled risk appetite, giving investors hope that the Fed can engineer a soft landing for the U.S. economy.
There are no major Asian economic indicators or corporate earnings releases on Friday to really drive market direction, and volumes will be relatively light due to China still being closed for Lunar New Year.
That leaves Thursday’s feel good factor free to filter into Friday unless investors indulge in a spot of profit-taking, although surprisingly weak revenue forecasts from Intel after the closing bell on Thursday may sour sentiment.
Still, it will take a fall of at least 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 holiday, and its 2.37% surge to a 10-month high on Thursday was the regional standout.
If MSCI Asia ex-Japan’s 31% rise since the October low is remarkable, the Hang Seng’s 55% rally is extraordinary, and the Hang Seng tech index’s 75% surge over the same period is another level of staggering.
The main Asian economic data point in an otherwise light calendar on Friday is 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’s worth noting that this measure of annual inflation was negative for most of 2021 and only 0.2% a year ago. Food for thought for the incoming Bank of Japan Governor.
Three key developments that could provide more direction to markets on Friday:
– Japan inflation (December)
– Australia producer price inflation (Q4)
– U.S. PCE inflation (December)
(Reporting by Jamie McGeever in Orlando, Fla.; Editing by Josie Kao)