Asia is preparing for a mixed start after elections in Taiwan

Bloomberg – Asian Stock Markets Prepare for a generally mixed openingThis after boosting bets on interest rate cuts by the Federal Reserve and Taiwan's elections over the weekend.

Stock futures in Australia and Hong Kong point to an early rise when trading begins, while contracts in Japan are down. The S&P 500 was barely changed on Fridayposting weekly gains after US producer prices unexpectedly fell, boosting bets on a Federal Reserve interest rate cut in March.

Traders will be watching Taiwanese assets next The Progressive Democratic Party will win the presidential elections The Kuomintang, the more pro-Chinese party, received too few seats to control the assembly. China has so far failed to respond to the weekend's results, while the Democratic Progressive Party's loss of its majority in the Legislative Assembly raises the prospect of the major parties being forced to cooperate on policy.

The result largely coincides with pre-vote opinion polls, so “we expect little reaction from global financial markets to the election result,” they wrote in a note to clients. Strategists at the Commonwealth Bank of Australia are led by Joseph Capurso.

The stable start in Asia comes as global stocks started the year on the wrong foot after last quarter's 11% rise – the biggest rise in three years – amid… The euphoria of artificial intelligence And bets that the cycle of raising global interest rates has ended. However, Chinese stocks fell on consumer spending, while Japanese stocks last week hit their highest level since 1990, as decades-long deflation faded and a weak yen favored exporters' stocks.

“I expect a pause/decline from now on,” he said. Rick Bensignor, President of Bensignor Investment Strategies and former Morgan Stanley strategistIn a note on Japanese stocks. “But this long-overlooked market woke up a year ago, and is still a place to make money.”

Prices of manufactured products fall

In the meantime, Fixed income markets were shaken by key inflation and employment dataWhich presents a mixed picture of the US economy. Treasuries rose on Friday after the producer price index for final demand fell for the third straight month. Swap traders see a roughly 80% chance of the Fed's monetary easing cycle starting in March, up from 62% last week, according to data compiled by the Fed. Bloomberg.

according to Mark Chandler, Chief Market Strategist at Bannockburn Global Forex“The market is pricing in interest rate cuts this year at around 170 basis points, which still seems unreasonable to us, especially since real sector data may show that the US economy continued to grow above 1.8% in the fourth quarter, which is what the Fed estimates is the maximum.” For non-inflationary speed. “Real sector data in the coming days could encourage a reduction in aggressive bets.”

After the big surge in the fourth quarter, investors are turning their attention to what companies have to show on their earnings scorecards. Wall Street's largest banks took turns on Friday in demanding an end to the record streak of their biggest income earner. Wells Fargo & Company Analysts surprised by forecasting net interest income to fall 9% by 2024, while Citigroup Inc. expected a modest decline this year. Even JPMorgan Chase & Co., which expects its 2024 balance to remain at 2023 levels, expects it to decline over the course of the year.

In addition to more US earnings reports, investors this week will focus on inflation readings in Germany and the UK, as well as a number of political leaders and officials, including… Chinese Premier Li QiangWho will attend the annual World Economic Forum in Davos, Switzerland. Federal Reserve Governor Chris Waller's speech will also be closely watched after officials last week sought to temper any expectations of an imminent interest rate cut.

“Fed Governor Waller gave an early and strong signal in October that the Fed might stop raising interest rates and consider a shift,” he wrote. Stephen Gallagher, economist at Société Générale, in a note to his clients. “We will watch for any decline in financial markets' expectations for a rate cut in March.”

Elsewhere, oil and gold prices rose on Friday as the United States and its allies launched air strikes against Houthi rebels in Yemen.

Here are some of the major market movements:

procedures

• Hang Seng futures rose 0.2% at 6:56 a.m. Tokyo time.
• S&P/ASX 200 futures were little changed.

Currency exchange rate

• The Bloomberg Dollar Spot Index was little changed
• The euro was trading at $1.0952.
• The Japanese yen was trading at 144.93 per dollar.
• The yuan was trading at 7.1876 to the dollar.
• The Australian dollar was trading at $0.6687.

Digital currencies

• Bitcoin fell 1.3% to $42,405.07.
• Ethereum fell 2.1% to $2,518.28.

Rewards

• The yield on Australian 10-year bonds rose one basis point to 4.08%.

raw materials

• A barrel of West Texas Intermediate crude rose by 0.9% to $72.68.
• Gold rose in spot transactions by 1 percent to $2,049.06 per ounce.

This article was produced with the help of Bloomberg Automation.

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