Japan leads gains in Asia markets, China loan prime rates unchanged
The Nikkei 225 hit a near 34-year high, trading at 36,438, last up about 1.3%. The Topix rose 0.73%. Tech stocks in Asia got a boost from optimism on Wall Street, with the S&P500 surpassing its all-time high on Friday.
The Bank of Japan also kicks off its two-day monetary policy meeting, and will announce its monetary policy decision on Tuesday.
Later in the week, Japan will release its trade balances for December on Tuesday and January inflation numbers for Tokyo on Friday.
The U.S. broad market index rose 1.23% to settle at 4,839.81, crossing both the record intraday and closing highs from January 2022.
The Dow Jones Industrial Average, which set its own all-time high at the end of last year, added 1.05%, while the Nasdaq Composite advanced 1.70%.
The People’s Bank of China left the one- and five-year loan prime rates left unchanged at 3.45% and 4.2%.
China’s CSI 300 index opened 0.11% lower, while Hong Kong’s Hang Seng index fell 0.3% at open.
In Australia, the S&P/ASX 200 started the week up 0.60%, extending gains from Friday.
South Korea’s Kospi was flat, while the small-cap Kosdaq dipped 0.33%.
South Korea will also release its gross domestic product figures for the fourth quarter of 2023 on Wednesday.
Markets expect China’s LPR to remain unchanged
Investors will be looking out for an update from China’s central bank on its one- and five-year loan prime rates at around 09:15 a.m. Singapore time.
The one- and five-year LPR currently stand at 3.45% and 4.2%, respectively, and markets expect the People’s Bank of China to make no changes to the rates.
“The market expects both the 1Y and 5Y LPRs to be unchanged at 3.45% and 4.2% respectively,” analysts wrote in a client note, while also noting that China’s foreign direct investment recorded its biggest annual drop in 2023 since 2009.
Analysts said FDI in China fell 8% last year, in Chinese yuan terms, attributing the decline to several factors including the country’s economic slowdown, high global interest rates, increasing regulatory and geopolitical risks, and the West’s tough stance on China’s technology sector.
The biopharmaceutical sector is expected to offer a safe haven from macroeconomic and earnings concerns ahead of quarterly results from European companies, according to an investment bank.
The bank said European biopharma stock prices should be supported in the near term due to its “undemanding valuations and a backdrop of challenging macro conditions and cyclical earnings risk”.
The investment bank named 8 stocks with a ‘Buy’ rating in the sector, and gave one 119% upside potential.
The anti-obesity drug market is expected to remain in focus this year after a bumper 2023 for weight loss drug makers, according to analysts.
The Germany-headquartered investment bank expects a combination of new clinical data and the expiry of patents to unleash new opportunities for several generic drug manufacturers in Europe. GLP-1 drugs encourage the production of hormones that cause weight loss through reduced appetite.
Analysts have named 4 stocks of generic drug makers that are set to benefit from the expiry of these patents.
Oil prices edged slightly lower on Friday but booked a weekly gain on tensions in the Middle East.
The West Texas Intermediate contract for February fell 67 cents, or .9%, to settle at $73.41 a barrel. The Brent contract for March shed 54 cents, or .68%, to settle at $78.56 a barrel.
U.S. crude booked a one-week gain of 1% as investors keep a close eye on whether attacks by militants in the Red Sea could lead to a supply disruption. The global benchmark was up .47% for the week.
The University of Michigan’s Survey of Consumers released on Friday indicated that consumers are growing increasingly confident on the economy and falling inflation.
The survey showed a reading of 78.8 for January, its highest level since July 2021 and up 21.4% from a year ago. That followed a big jump in December and comes despite public opinion surveys showing concern about the nation’s direction.
On a two-month basis, sentiment showed its largest increase since 1991.
Bitcoin and ether rose with the stock market to end the week after the S&P 500 jumped to a new all-time high.
The price of bitcoin was up 2% at $41,763.87, after falling back to the key support level of $40,000 Thursday. Ether was 2% higher and trading at $2,491.82.
“Positive consumer sentiment and slowing inflation helped fuel the rally in risk-on assets,” said an analyst. “Investors generally view crypto investments as similar to tech and risk-on investments, so crypto riding this rally makes sense.”
Bitcoin is still on pace to post a 4% loss for a week. It’s fallen 10% since Jan. 10, when bitcoin ETFs were greenlit to begin trading in the U.S. The ETF approvals were widely expected to be a sell-the-news event. Ether is on pace to finish the week lower by 3%.
The move in crypto assets wasn’t enough to pull up equities, however. Several mining stocks were flat, while one rose about 1%.