APAC Market Wrap - Feb 13
Chinese Equity Markets:
A-share markets concluded the Year of the Snake on a high note, with all major indices ending the year firmly in positive territory.
The Shanghai Composite recorded a cumulative annual gain of 25.58%, while the Shenzhen Component surged 38.84%. The ChiNext Index emerged as the clear leader, rallying a powerful 58.73% for the year.
Hong Kong Equity Markets:
Hong Kong stocks maintained their range-bound pattern this week. By the close, the Hang Seng Index edged up 0.03% to 26,567.12; the Tech Index rose 0.27% to 5,360.42; and the Hang Seng China Enterprises Index remained flat (up 0.01%) at 9,032.71.
Sector performance saw gold, non-ferrous metals, optical communications, and oil lead the decliners, while AI applications and semiconductor stocks showed relative strength.
Japanese Equity Market:
The Nikkei 225 fell 1.21% to 56,941.97. Sectoral performance was mixed, with gains in transport equipment, pharmaceuticals, and air transport offset by retreats in mining, steel, and services.
South Korean Equity Market:
The KOSPI composite index edged down 0.28% to 5,507.01. Securities and wireless communications saw significant gains, while electrical appliances and trading companies declined.
Australian Equity Market:
The S&P/ASX 200 dropped 1.39% to 8,917.66. Diversified financials and utilities gained, while aerospace, medical equipment, and semiconductors trended lower.
Singapore Equity Market:
The Straits Times Index (STI) declined 1.57% to 4,937.78. Forestry products and furniture sectors rose, while oil & gas, industrial products, and software sectors retreated.
Malaysian Equity Market:
The FTSE Bursa Malaysia KLCI fell 0.65% to 1,739.54. Healthcare and real estate sectors saw gains, while financial services and technology led the decline.
Key Events
BOE Hawkish Shift: Tamura Hints at Early Tightening as Inflation Persists
Naoki Tamura, one of the Bank of Japan’s most hawkish board members, indicated on Friday that the conditions for another rate hike could be met as early as this spring. "
If we can confirm with a high degree of certainty that wage growth will meet targets for a third consecutive year, we could judge by this spring that the 2% price stability goal has been achieved," Tamura stated at a business conference, fueling speculation of an accelerated policy shift.
CPI Takes the Baton from NFP: Wall Street Braces for Inflation Data
Following a "hot" jobs report that dampened rate-cut hopes and sparked AI-related volatility, Wall Street is turning its attention to the January CPI report.
Like the NFP data, the release was delayed by the recent two-day federal government shutdown. Markets are braced for a report that is expected to show monthly core CPI acceleration even as the year-over-year figures continue to moderate, providing the final piece of the puzzle for the Fed's near-term rate trajectory.
Institutional Views
Kay Haigh of Goldman Sachs Asset Management noted that while the labor market shows early signs of re-tightening, the FOMC’s focus is now squarely on inflation. Goldman maintains that two rate cuts remain on the table for this year; however, an unexpectedly high CPI print today could shift the Fed in a decidedly hawkish direction.
TD Securities has shifted its expected timeline for the Fed's first rate cut from March to June. The firm continues to forecast a total of 75 basis points in easing for the year, targeting a terminal rate of 3.0%, with 25-bp cuts expected in June, September, and December.
The Yen gained against G10 and Asian peers as analysts noted Prime Minister Sanae Takaichi’s increasingly "responsible" fiscal stance. Nomura suggests the government may utilize surpluses from foreign exchange fund special accounts to finance temporary consumption tax relief, providing a reprieve for the FX market.
Nick Rees, Head of Macro Research at Monex, stated that the robust January employment data "should eliminate market bets on a March rate cut." While Monex still anticipates easing to resume in June, the immediate market reaction has been to naturally lower cut expectations in light of a resilient economy.