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Marketmind: Asia stocks soar despite big week for risk

Published 01/29/2024, 12:33 AM
Updated 01/29/2024, 12:35 AM
© Reuters. FILE PHOTO: A man watches an electric board showing Nikkei index outside a brokerage at a business district in Tokyo, Japan, June 21, 2021.   REUTERS/Kim Kyung-Hoon/File Photo

A look at the day ahead in European and global markets from Kevin Buckland

Neither Wall Street's wobble nor the liquidation of China Evergrande (HK:3333), the poster child of the property meltdown, stopped Asian markets from rallying to start the new week, with Hong Kong taking the lead.

Optimism that Beijing's stimulus promises are finally becoming action sent the Hang Seng up more than 1%, and markets from Tokyo to Seoul that were already rising were pulled higher in its wake.

Beijing's latest move to stabilise markets after their recent slump came on Sunday, with the securities regulator saying it will fully suspend the lending of restricted shares. That punctuated a week that also saw a hefty bank reserve ratio cut and a market-moving media report of a planned 2 trillion yuan ($278.45 billion) stocks stabilisation fund.

Of course, the Hang Seng has room to rise considering this time last week it was wallowing at a 15-month trough. And mainland Chinese blue chips were much more sanguine in their response, holding near three-week highs after last week's slide to five-year lows.

What it means for European equities is unclear though, considering too that U.S. stock futures are pointing slightly lower after the S&P 500 already slipped on Friday to snap a five-day streak of setting fresh all-time closing highs.

Caution is certainly warranted in a week brimming with big risk events. In the U.S. alone, the Federal Reserve decides policy on Wednesday, the influential monthly jobs report is due Friday, and the week is littered with mega-cap earnings from the likes of Alphabet (NASDAQ:GOOGL), Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN) and Meta Platforms (NASDAQ:META), which between them account for nearly 25% of the S&P 500.

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Monday's events are by comparison rather muted. Sweden releases preliminary GDP figures, and earnings are due from Ryanair and Koninklijke Philips (AS:PHG).

ECB deputy head Luis de Guindos is on the speaking circuit, days after investors exited the central bank's last meeting by cementing bets for a rate cut as soon as June.

The Bank of England takes its turn this week, announcing policy a day after the Fed.

Key developments that could influence markets on Monday:

- Sweden GDP (Q4)

- Ryanair, Koninklijke Philips financial results

- ECB's Luis de Guindos speaks

($1 = 7.1827 Chinese yuan)

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