Morning offer: Gloomy economic signals

Jan 26 (Reuters) – Jamie McGive’s view of the day ahead in Asian markets.

GDP data from South Korea and the Philippines featured in Asian data for investors on Thursday, as the upbeat sentiment that has fueled global stocks and risk funds higher this year showed signs of fading.

Some gloomy signals from the latest US earnings reports, a spate of layoffs in the technology sector and concerns about global growth are overshadowing hopes that the Fed and other central banks will take their foot off the pedal to tighten monetary policy.


The Bank of Canada is the latest to hint at a pause, signaling on Wednesday that it is likely to halt further hikes after raising its key interest rate to 4.5%. Some Asian central banks have done the same in recent weeks.

Of course, the end of the tightening cycle could be in sight for many central banks as the lagged effects of previous interest rate hikes have not yet been fully felt and policymakers expect growth to slow.

Investors will get the latest picture on the health of two Asian economies – the Philippines and South Korea – on Thursday before world markets get their first estimate of US growth in the October-December period later in the day.

South Korea’s economy is expected to have contracted by 0.3% in the fourth quarter of last year, the first quarterly contraction since the onset of COVID-19 in early 2020.

South Korea’s wealth is closely tied to the global technology sector and its largest trading partner, China. Both are sailing in turbulent waters.


Still, Asian stocks are flying. MSCI’s broadest index of Asia-Pacific shares ex-Japan hit a seven-month high on Wednesday. Interestingly, the index is up 30% from its October low exactly three months ago, and has risen 11 of the last 13 weeks.

It may be due to a correction, and if it comes on Thursday, it will be on a larger scale than the three days of gains this week, as some Asian markets reopen after the Lunar New Year holidays.

China, however, is still closed.

Three key developments that could provide more direction to markets on Thursday:

– GDP of South Korea (Q4)

– GDP of the Philippines (Q4)

– US GDP (forward estimate for the 4th quarter)

Reporting by Jamie McGeever in Orlando, Florida; Editing by Josie Kao

Our Standards: Thomson Reuters Trust Principles.

The opinions expressed are those of the author. They do not reflect the views of Reuters News, which is committed to integrity, independence and freedom from bias in accordance with its principles of trust.

Jamie McGeever

Thomson Reuters

Jamie McGeever has been a financial journalist since 1998, reporting from Brazil, Spain, New York, London and now back in the US. Focus on the economy, central banks, policy makers and global markets – especially FX and fixed income. Follow me on Twitter: @ReutersJamie

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