Marketmind: Japan CPI to light up dulled Thanksgiving trade

By Denny Thomas

TORONTO (Reuters) – A look at the day ahead in Asian markets.

With Wall Street shut for Thanksgiving on Thursday, Asian investors will miss the usual swing factor. Instead, Friday’s release of Japan’s core inflation data for October will set the tone for trading in the region.

Japan’s core consumer inflation likely accelerated again in October, staying above the central bank’s 2% price target for a 19th straight month, according to a Reuters poll.

With inflation already exceeding the Bank of Japan’s target for more than a year, the latest data may influence the central bank’s widely expected decision to raise short-term interest rates to around zero from -0.1 next year with some betting on the chance of action in January.

And upside surprise could buoy the yen against the dollar.

The BOJ faces challenges in navigating Japan away from the extremely accommodative policy of the past decade without causing market turmoil or squashing a fragile economic recovery.

In China, property stocks are likely to be in focus again on expectations Beijing would offer a range of financing to support the struggling sector.

It’s a different inflation tale on the other side of the world, with the European Central Bank satisfied with the easing price pressures in the euro zone. That made the ECB’s decision to hold rates steady in October an easy task, according to the accounts of their Oct. 25 to 26 meeting released on Thursday showed.

Stocks in Europe ended firmer, with the ECB news cementing the view that the global central banks are done with their latest tightening campaign, and if price pressures ease, 2024 could be the year of rate cuts.

But some of the inflation-easing trade is already priced into the market, reflected in the near 11% rally in the MSCI world index in the past 18 trading days. And markets need new triggers to fuel the next leg of the equities rally.

One factor could be the resilience of American consumers, who have continued to open their wallets despite higher borrowing costs.

The Black Friday sale will kick off the year-end holiday shopping season and will put to test the U.S. consumers’ appetite for spending.

Early indications are that U.S. retailers across apparel, electronics and home improvement are bracing for challenging times, and higher discounts might not spark the level of spending the companies are hoping for.

Here are key developments that could provide more direction to markets on Friday:

– Japan CPI

– Singapore industrial production

– Malaysia CPI

– New Zealand retail sales

– Thailand manufacturing production index

– Taiwan money supply

(By Denny Thomas; Editing by Josie Kao)

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