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©Reuters.
Investing.com — Most Asian stocks were mixed on Monday, with Chinese stocks weighed down by the People’s Bank of China’s unexpected decision to keep lending rates on hold while Japanese markets continued to outperform.
Sentiment towards regional markets was also weighed down by Chinese economic data and the Chinese government’s reaction to Taiwan’s presidential election, which also kept traders on edge this week.
Japanese stocks posted the best performance among their peers for the fourth straight quarter, rising 0.5% to a 34-year high as traders remain heavily biased towards domestic stocks due to the prospect of a super-dovish Bank of Japan. updated.
Japan’s Consumer Price Index (CPI) data to be released later this week is expected to show a sustained decline in inflation, prompting a dovish stance from the Bank of Japan.
The index rose 0.5% after Democratic Progressive Party (DPP) candidate William Lai won the presidential election over the weekend, with the island’s resistance to unification with China largely preserving the status quo.
Mr. Lai, along with the Democratic Progressive Party, has repeatedly advocated for Taiwan’s independence, which has become a major point of anger for the Chinese government. The Chinese government reiterated its calls for unification over the weekend, and further actions by the Chinese government will be closely watched in the run-up to Lai’s official inauguration in May.
Chinese stocks weighed down by disappointing rate cut, 4th quarter GDP expected
China’s indexes and indexes were little moved after stabilizing from early losses, while Hong Kong’s index rose 0.2% after recovering from a 0.5% decline in early trade.
The People’s Bank of China (PBOC) unexpectedly left its medium-term lending rate unchanged on Monday as it struggles to balance promoting economic growth and preventing further depreciation of the yuan. The move foretells that the central bank’s major policies will remain unchanged in the second half of January.
Still, Chinese stocks received some support from the People’s Bank of China’s liquidity injection.
Monday’s move shows that the Chinese government has limited scope to further ease financial conditions to support growth, which could bode ill for the fragile post-COVID-19 economic recovery. There is sex.
This week’s focus will primarily be on the fourth quarter GDP statistics, which will be released on Wednesday. Growth is expected to exceed the government’s 5% target for 2023, but much of the increase is also expected to be from a lower base compared to the previous year.
Chinese stocks were the worst-performing Asian market in 2023, dropping between 10% and 20% as the post-COVID-19 economic recovery failed to materialize.
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Asian markets as a whole were sluggish as sentiment remained tense due to the Middle East conflict. With the US market closed, trading opportunities are expected to be limited.
Most regional stocks had been bracing for a slight decline since last week after better-than-expected U.S. inflation data raised some doubts that the Federal Reserve would cut interest rates early.
Australia’s index was flat, while South Korea’s index fell by 0.2%.
Indian index futures opened flat, with domestic stocks expected to trade flat, roughly following their regional peers. India’s inflation rate is expected later on Monday after Friday’s data showed a smaller-than-expected rise in inflation.
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