Asian stocks pumps as China reopening boosts investor confidence
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Asian stocks have been rallying despite concerns of the Bank of Japan’s pivotal meeting that will be held this week. The stocks have been on a steady recovery due to China’s reopening and the move of the Xi Jinping government to ease COVID restrictions.
Asian stocks pump as yen gains
As the stocks rallied due to the anticipation of China reopening its economy, the yen also rose to the highest level since May. The rally came amid speculations that the BOJ will hold an emergency meeting as the institution struggles to defend the newly imposed yield cap amid skyrocketing sale volumes.
The local markets reacted to the changes being adopted by the BOJ, with the Japan Nikkei index dropping by 1.3% to a two-week low. On the other hand, the MSCI index gained slightly by 0.9% amid hopes that China would speed up reopening. The index has rallied 4.2% in the last week due to these concerns.
The Chinese blue chips stocks have also made a notable recovery after gaining 2%. The yuan is currently at the highest level since July as the Chinese government has adopted some market-friendly policies.
Global stocks have also been gaining. The EUTOSTOXX 50 futures is up by 0.6%, while the FTSE futures has gained by 0.1%. The S&P 500 futures and the Nasdaq futures have also gained amid an impressive recovery that was reported across Wall Street in the past week.
Markets set to react to a series of news this week
The stock markets could react to a series of news happening during the week. The earnings season is gathering steam. Some of the largest names on Wall Street, Morgan Stanley and Goldman Sachs, alongside one of the largest tech giants, Netflix, is among the companies that will be releasing their earnings report.
Moreover, the World Economic Forum is holding a meeting in Davos. The meeting will be attended by quite a number of central bankers, who will be speaking alongside several members of the Federal Reserve. The speeches could shed a light on the actual status of the economy.
The Bank of Japan is holding a two day meeting that will end on Wednesday. There are speculations that the bank will announce changes to its yield curve control policy as the market has already pushed the 10-year yields above the 0.5% cap.
As a way of taming the market, the BOJ purchased nearly 5 trillion ten of bonds on Friday. This was the largest daily operation that has ever been conducted by the institution. However, the purchase did not have any notable effects as the yields ended the session at around 0.51%.
