Asian markets opened the week generally higher follow gains in US on Friday. Nikkei shrugged off worst than expected GDP data and is trading up more than 700pts, or 4.8% at the time of writing. Japan GDP contracted -0.4% qoq in Q4, below expectation of 0.3% qoq. GDP delator also slowed more than expected to 1.5% yoy versus consensus of 1.6% yoy. Looking at some details, business spending rose 1.4% qoq while But private consumptions dropped -0.8% qoq. Some economists noted that consumption was particularly weak the lack of wage growth was a significant problem. There are talks that BoJ would take additional easing in March due to increasing risks on both growth and inflation outlook. Yen continues to pare back last week's gain and risk aversion eased.
China markets are back on holiday and opened mildly lower. Shanghai SSE (L:SSE) composite is trading just down -62 pts, or -2.2% at the time of writing. PBoC head Zhou Xiaochuan tried to talk down the problem of capital outflow and noted that "it is normal for foreign reserves to rise and fall as long as the fundamentals face no problems." And, "at the moment the level of cross-border capital flows is within the normal region." Meanwhile, he also reiterated that "the trend is to rely further on the market to decide the level of the currency and to achieve a more flexible foreign exchange rate".
In Eurozone, ECB executive board member Peter Praet said over the weekend that "compared with the situation in December we are seeing new downside risks. The main causes are the falling price of oil and a decline in global growth. In the past few days we have also seen greater volatility on the financial markets. If that continues for too long, it can also increase the risk of a rise in inflation being delayed."
Looking ahead, Eurozone trade balance will be the main focus today and US will be on holiday. A wide range of economic data will be released this week. Inflation data from UK, China , Canada and US will be watched. UK and Australia will also released job data.
Here are some highlights for the week:
- Tuesday: New Zealand retail sales, inflation expectations; RBA minutes; UK inflation; German ZEW; Canada manufacturing sales; US Empire state manufacturing, NAHB housing market index
- Wednesday: Japan machine orders; UK job data; Swiss ZEW; US PPI, new residential construction, industrial production
- Thursday: New Zealand PPI; Australia employment; China CPI; Swiss trade balance; US Philly Fed survey, jobless claims
- Friday: Japan all industry index; UK retail sales; Canada CPI, retail sales; US CPI