On Asian markets, trading was cautious on Monday as investors analyzed data from the largest economies in the region, and the dollar slightly weakened against a basket of currencies as a reduction in interest rates by the American Fed is expected.
MSCI Asia-Pacific index, excluding Japan, was nearly unchanged at around 7:00 AM compared to Friday. Meanwhile, stock prices in Japan, Australia, India, and Hong Kong fell between 0.1 and 1.1 percent, while in Shanghai and South Korea they rose between 0.6 and 0.8 percent. Caution prevails in Asian markets as investors analyze new macroeconomic reports.
According to the second estimate, the Japanese economy fell by 2.3 percent year-on-year in the third quarter, more than the first estimate indicated and more than analysts expected. However, the Japanese Nikkei index did not fall significantly as the government announced a stimulus package and because a sharp decline in gross domestic product (GDP) could influence the decision of the Japanese central bank on interest rates. Recently, monetary authorities signaled that they might raise interest rates in December due to rising inflation, but they may reconsider given the sharper economic decline.
Chinese Exports Rise Above Expectations
The Chinese statistical office reported that the country’s exports in November rose by 5.9 percent year-on-year, exceeding expectations, indicating strong foreign demand, although the US has imposed tariffs on imports of Chinese products. However, China’s imports rose by only 1.9 percent year-on-year in November, less than analysts expected, indicating weakness in domestic demand.
Market support comes from investors’ belief that the US central bank will further reduce interest rates by 0.25 percentage points at this week’s meeting, to a range of 3.75 to 4 percent. This week, the central banks of Canada and Switzerland will also hold meetings (in Australia as well, editor’s note). However, no interest rate cuts are expected in those countries.
Dollar Slightly Falls, Oil Prices Slightly Rise
In the currency markets, the value of the dollar against a basket of currencies has slightly fallen. The dollar index, which shows the value of the US dollar against the other six major world currencies, is around 98.90 points this morning, down from 98.98 points on Friday evening. The dollar’s exchange rate against the Japanese currency slipped from 155.35 to 155.25 yen. The US currency also weakened against the euro, with the euro price reaching 1.1655 dollars, up from 1.1642 dollars on Friday evening.
