It could not be more different in Japan. Stocks have powered to a 33-year high, the economy grew much faster than expected in the first quarter, and the Bank of Japan could soon start to reverse its ultra-loose policy. Investors like what they see.
Wider market sentiment on Monday could be set by the mood music in Washington around the debt ceiling. President Joe Biden and House Republican Speaker Kevin McCarthy will meet after a “productive” phone call on Sunday as the president returned from the G7 summit.
McCarthy said on Sunday there were positive discussions on solving the crisis and that staff-level talks will resume ahead of his meeting with Biden. Markets will see this as progress.
On the other hand, Treasury Secretary Janet Yellen reiterated that June 1 remains a “hard deadline” for raising the debt ceiling. If not, the government will likely run out of cash and fail to meet all its commitments through June 15, when more tax receipts are due.
Time is running out and as long as there is no deal, a U.S. default, a potential catastrophe for world markets, cannot be completely ruled out.
Later this week the Reserve Bank of New Zealand is expected to raise its cash rate one last time by 25 basis points to 5.50%, while Bank of Korea and Bank Indonesia are seen keeping their benchmark rates on hold at 3.50% and 5.75%, respectively.
