Asia markets trade mixed as investors await China rate decision

There's an anticipation of a mixed start for the Asia-Pacific markets on Friday as traders anticipate significant economic updates from China and Japan.

 

The People's Bank of China is set to announce its loan prime rate decision on Friday, with market participants observing if there will be a rate cut aimed at invigorating the Chinese economy.

 

The one-year loan prime rate impacts corporate and most household loans in China, whereas the five-year rate acts as a reference point for mortgage interest rates.

 

At present, the one-year rate is 3.1%, and the five-year rate is 3.6%.

 

Japan has also released its November inflation statistics, following the Bank of Japan's decision to maintain interest rates at 0.25% on the previous day.

 

The core inflation rate, excluding fresh food prices, rose to 2.7%, slightly above the 2.6% predicted by economists surveyed by Reuters.

 

The overall inflation rate reached 2.9%, exceeding the 2.3% recorded in October.

 

Japan's Nikkei 225 is projected to gain, with the futures contract in Chicago at 39,085 and its counterpart in Osaka at 39,020, compared to the index's last closing of 38,813.58.

 

Conversely, futures for Hong Kong's Hang Seng index were at 19,730, indicating a softer start as opposed to the HSI's last close of 19,752.51.

 

Australia's S&P/ASX 200 began the session down 0.77%, marking its lowest point since September.

 

On Thursday night in the U.S., the Dow Jones Industrial Average narrowly broke its longest losing period since 1974.

 

The 30-stock Dow increased by 0.04%, whereas other major U.S. indexes declined, with the S&P 500 down 0.09% and the Nasdaq Composite falling 0.10%.

 

The 10-year Treasury yield climbed for the second consecutive day, passing 4.5% and exerting pressure on stocks. The yield climbed more than 13 points in the previous session.

 

Leading House Republicans announced on Thursday afternoon that they agreed on a short-term government funding agreement to avoid a shutdown that was scheduled to begin on Friday evening.

 

The deal was reached after President-elect Donald Trump expressed he would not back any plan lacking a debt ceiling increase.

 

"Our Country would be better off temporarily shutting down than agreeing to what the Democrats are trying to impose on us," Trump stated on Truth Social.

 

Wall Street's volatility gauge — the VIX — soared by the second-highest percentage in history on Wednesday, following the Federal Reserve's announcement to scale back its rate-cutting campaign, which jolted the stock market.

 

The CBOE Volatility Index spiked 74% to close at 27.62, an increase from around 15 earlier in the day. This marks the second-largest surge in history, following a 115% jump to above 37 in February 2018 during an escalation in funds linked to the volatility index.

 

The move on Wednesday followed the central bank's indication to likely reduce interest rates only twice the next year, down from the four cuts forecasted in September, unsettling investors who favored low rates to continue driving the bull market. The Dow Jones Industrial Average plummeted by 1,100 points marking its 10th consecutive loss.

 

The U.S. economy expanded at a faster rate in the third quarter than was previously estimated, according to the final third estimate from the Commerce Department on Thursday.

 

Gross domestic product grew at a 3.1% seasonally adjusted annual rate from July to September, which is 0.3 percentage points more than the last estimate and above the 2.9% consensus estimate by Dow Jones.

 

Consumer expenditure, which comprises about two-thirds of the total activity in the $29.4 trillion U.S. economy, increased by 3.7% during the quarter, being 0.2 percentage points faster than the earlier estimate.