(Reuters) – Future outlook for the Asian market.
The Spring Meetings of the International Monetary Fund and World Bank in Washington were filled with comments from world financial leaders, and many markets have seen significant movement in recent weeks, prompting investors to take a moment. ing.
Recent persistent bond selling reversed on Wednesday, pushing yields lower, gold was flat again, oil fell 3%, its steepest decline in two months, and stocks were volatile.
Whether it's fatigue (gold), short covering (bonds), concerns about the impact of rising borrowing costs on growth and demand (stocks and oil), or simply a refuge from intensive coverage from Washington. Well, investors are reducing risk.
This is the backdrop for Asian markets on Thursday, a calendar that includes Japan's tertiary industry activity index, unemployment rates in Australia and Hong Kong, and a speech from Bank of Japan board member Asahi Noguchi.
On the equity side, a correction that appears to be underway in some quarters gained momentum on Wednesday, despite a notable drop in bond yields and the dollar's first one-day decline in seven years.
Japan's Nikkei Stock Average fell 3.6% this week, on track to be the biggest weekly decline since December 2022. The S&P 500 fell for the fourth day in a row, on track to decline for the third consecutive week, and has fallen 5% since December 2022. Last month was the highest ever.
The MSCI Asia Index excluding Japan has fallen since the beginning of the year.
Exchange rates, and therefore trade competitiveness, restrictions and tariffs, remain under close scrutiny.
President Joe Biden on Wednesday called for a significant increase in U.S. tariffs on Chinese metal products, with tariffs of up to 25% on some steel and aluminum products, a move that risks angering Beijing.
Meanwhile, financial leaders from the United States, Japan and South Korea agreed to “closely consult” on foreign exchange markets in their first tripartite meeting on Wednesday, citing Japan and South Korea's concerns over the recent plunge in their currencies. nodded.
The agreement reached at the first tripartite meeting came as expectations for a short-term interest rate cut in the United States receded, causing the yen to fall to its lowest level in 34 years, and the market remained wary of the possibility of Japanese authorities intervening to buy the yen.
“We will continue to work together to promote sustainable economic growth, financial stability, and orderly and well-functioning financial markets,” the joint statement said.
Japan may not be actively seeking to export its path to prosperity, and a weaker yen may be justified given relative economic and interest rate fundamentals, but such dramatic developments in Asia changes in the terms of trade tend not to be unique.
Is Asia sliding towards a 'beggar-thy-neighbor' wave of competitive foreign exchange depreciation? Statements from the United States, Japan and South Korea show that officials are keenly aware of the risks.
Here are the key developments that could give further direction to the market on Thursday:
– IMF/World Bank Conference in Washington
– Australian unemployment rate (March)
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