Morning Wrap (23.01.2024)

Indices in the Asia-Pacific region are rebounding, except for the Japanese market. Chinese indices, including HSCI and HSI, are gaining over 3.20%.

The Japanese Nikkei 225 index is the only one recording a loss of about 0.10%, while Kospi gains 0.45%, and the Australian S&P ASX 200 increases by 0.60%.

The Japanese market is losing following the decision and comments of the Bank of Japan (BoJ). JPY is the weakest currency among the G10 currencies today, with USDJPY gaining 0.10% to 148.100 despite an equally weak dollar in the first part of the day.

The BoJ left interest rates unchanged at -0.10%. The main assumptions of BoJ policy also remain unchanged. The yield on 10-year bonds remains around 0%, but with an allowable change of up to 1%. The BoJ does not introduce changes to forward guidance regarding monetary policy.

BoJ Quarterly Report: Will continue QQE and YCC as long as necessary.

The BoJ noted that CPI inflation is likely to rise gradually towards achieving the target. The probability of realizing the forecast is still gradually increasing, although there is still significant uncertainty about the future development of the situation.

Additionally, the Bank of Japan slightly revised down its core inflation forecasts:

• The median core CPI forecast for 2023 at +2.8%, compared to +2.8% in October
• The median core CPI forecast for 2024 at +2.4%, compared to +2.8% in October
• The median core CPI index for 2025 at +1.8%, compared to +1.7% in October

China plans to extend the suspension of preferential tariff rates provided in the trade agreement between China and Taiwan (Economic Cooperation Framework Agreement (ECFA)) signed in 2010. According to media reports, China cites the result of the presidential elections in Taiwan.

China Securities Journal claims that the People's Bank of China may lower the basic Loan Prime Rates (LPR) in the first quarter of 2024.

The chief economist of Goldman Sachs believes that the US Fed will achieve a soft landing in the US economy.

Stock markets in China are rebounding, reacting to recent dynamic declines following reports that Chinese policymakers are trying to mobilize about 2 trillion yuan (278.53 billion USD) as part of a stabilization fund to purchase shares on the mainland through the Hong Kong stock exchange. The options being considered may be announced this week if approved by the country's top leadership.

Cryptocurrencies are declining, with Bitcoin struggling to maintain the 40,000 USD level. A total of 76 million USD flowed out of Bitcoin ETFs yesterday, with Grayscale responsible for 640 million USD of outflows, while the rest of the funds recorded inflows of around 564 million USD.