(Adjusts cut to go up in section, Mizuho spell in section 2.)
Written by Jamie McGeever
(Reuters) – Looking ahead to the day ahead in Asian markets.
Asian commodities are rarely exposed to more market-moving factors in a single day than on Wednesday, with the Bank of Japan's decision and China's purchasing managers' index reported higher in the full policy, data and business calendar.
Investors are also looking at second quarter GDP estimates from Taiwan and Hong Kong, inflation numbers from Australia, and earnings from heavyweights including HSBC, Samsung (KS:), Panasonic (OTC :), Mizuho and Sumitomo.
This all follows a sharp sell-off in US Big Tech on Tuesday after Microsoft (NASDAQ:
With so much risk of upcoming events – it's almost the end of the month again – the escalation of conflict in the Middle East could not come at a more critical time for the markets. Global stocks, the Nasdaq and the US Treasury produced all slide on Tuesday.
The dollar on Tuesday hit a three-week high on an index basis, pushed above 155.00 yen, and adjusted to its strongest level since November against the . But the US defense trade is over.
The BOJ's policy decision is on a knife's edge, at least in terms of money market prices, indicating a 55% chance that the BOJ will raise rates by 10 basis points. That's down from a 60% chance earlier this week.
If the central bank pauses to deliver a hawkish message, the dollar may return to the intervention zone of around 160.00 yen. Walking and hawkish posture can bring 150.00 to the view.
While policymakers are expected to unveil plans to reduce the bank's huge incentive to buy bonds, a rate hike is a close call. They may wait and see what the Fed does later on Wednesday, making a move in September more likely.
While the Bank of Japan deliberates on how to tighten policy, the People's Bank of China is going the other way, and PMIs in Beijing on Wednesday will give the first impression of how the world's second largest economy performed in July.
Prospects are kept low – the manufacturing PMI is forecast at 49.3, according to a Reuters poll, down from June's 49.5 and marking the third month of contraction in a row.
More momentum is needed if 2024 GDP growth is to reach Beijing's 5% target, especially as US tariffs fall sharply. China's leaders on Tuesday signaled that the stimulus would be directed at consumers, deviating from their usual playbook of pouring money into infrastructure projects.
Elsewhere, inflation in Australia in June is expected to reach 3.8%, from 3.6% in May, while annual GDP growth in Taiwan is seen to slow to 4.8% in the April-June period from 6.6% in Q1.
Here are the key developments that could provide additional direction to markets on Wednesday:
– Bank of Japan policy decision
– China's 'official' PMIs (July)
– Taiwan's GDP (Q2)
