Asian markets look to round off a difficult week with a flourish on Friday, but ominous signals from U.S. trading on Thursday – stocks closed in the red again despite a steep decline in bond yields – do not auger well.
The conditions for a sharp rebound on Wall Street were in place – third quarter U.S. GDP beat forecasts, and the ‘soft landing’ narrative was bolstered by some signs of cooling inflation and sharp pullback in yields.
But not only did stocks fail to claw back any of Wednesday’s heavy losses, they fell almost as much again, pushing the S&P 500 and Nasdaq to new lows since May.
This is the backdrop to Friday’s open in Asia, where Japanese economic data, bonds, and currency will again be under intense scrutiny ahead of next week’s Bank of Japan policy meeting.
The main data release in Asia on Friday will be consumer price inflation in Tokyo for September. Core consumer inflation in the Japanese capital is expected to have held steady at a 2.5% annual rate in October, according to a Reuters poll, the lowest since July last year.
The BOJ next week is set to raise its national core consumer inflation forecast for the fiscal year ending in March 2024 to near 3% from the current 2.5% projection made in July, sources told Reuters.
