Morning Bid: Bank of Japan, China PMIs top bumper day

10/30/2024

2 minutes read

2024.10.30 19:22

By Jamie McGeever

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

Thursday is shaping up to be a huge day for markets in Asia as investors brace for a deluge of major corporate and economic newsflow, topped by the Bank of Japan’s policy decision and China’s official purchasing managers index surveys for October.

Third-quarter GDP figures from Taiwan and Hong Kong, retail sales from Japan and Australia, and the latest earnings reports from regional giants such as Samsung (KS:), Panasonic (OTC:) and Sumitomo are also on tap.

U.S. bond yields were little changed on Wednesday, holding steady around levels not seen since early July, while the dollar eased back from Tuesday’s three-month high. At least that represents no additional tightening of financial conditions.

But the 10-year yield snaps a run of five monthly declines, going into the last trading day of October up nearly 50 basis points in the month. The dollar is up over 3%, poised for its biggest monthly rise in more than two years.

U.S. equities on Wednesday failed to give a clear steer either, with Wall Street ending slightly lower, but investors in Asia may get some impetus from third-quarter earnings from Microsoft (NASDAQ:) and Facebook parent Meta Platforms (NASDAQ:) after the close on Wednesday.

Both offered upbeat outlooks, but in after-hours trading Microsoft shares were slightly higher and Meta shares were off 3%.

Shifting the focus back to Asia, attention on Thursday will be firmly fixed on Tokyo, specifically BOJ Governor Kazuo Ueda’s press conference after the central bank’s widely expected decision to leave key interest rates on hold.

Investors will be paying close attention not only to Ueda’s view on the macroeconomic outlook, but also how he thinks the political gridlock in the country following Sunday’s inconclusive general election might impact the central bank.

Japan’s yen remains on the weak side going into the meeting at around 153.00 per dollar, while the is back above 39000 points and up 3.5% so far in October. That would mark its best month since February.

Investors also have China’s ‘official’ PMIs for October to look forward to. It will be too early for Beijing’s blizzard of fiscal, monetary and liquidity stimulus measures to have had a direct impact, but any positive surprise will perhaps be seized upon more than usual.

Economists polled by Reuters expect National Statistics Bureau’s manufacturing PMI to come in at 49.9, showing that factory activity contracted in October for a sixth month, but by the tiniest of margins and close to swinging back into growth.

Chinese stocks continue to trade heavily, their weakness on Wednesday pulling broader Asian stocks down 0.8% to a one-month low. The MSCI Asia/Pacific ex-Japan equity index is down 3.5% in October, on track for its worst month since January.

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

– Japan interest rate decision