Asian stock indices rally to fresh highs

Thursday, February 26, 2015

Asian equities extended gains overnight, continuing on their strong run as investors flooded back into risk assets as the recent run of mediocre macroeconomic data and sluggish inflation outlook prompted investors to expect further central bank intervention in the coming months. Japan’s Nikkei reached a fresh 15 year high, adding just over 1% overnight as investors anticipated the release of Japanese inflation, industrial production and retail sales data, all due before midnight tonight. Market participants polled by Bloomberg expect industrial production to fall by 3.1% y/y in January with retail trade also anticipated to drop 1.2% y/y. Inflation is expected to remain unchanged at 2.4% y/y in January but any material change could see additional intervention and stimulus from the Bank of Japan, which would be a boon for domestic stocks.

Chinese mainland stock indices rallied to a four week high after a relatively subdued start to their shortened week as investors speculated that the People’s Bank of China along with policymaker in Beijing would step up efforts to support the economy. Industrial and financial companies led the rally higher with the Shanghai Composite adding almost 2.2% while the CSI 300 gained 2.5% overnight as Premier Li Keqiang commented that further supportive fiscal policy was needed. A separate release from the PBOC outlined the additional need of further monetary easing and with the National People’s Congress due to meet at the start of March investors are hopeful that further accommodative policy will be announced.

Investors will have plenty to keep them engaged today, with German unemployment data kicking off proceedings and eurozone business climate and consumer sentiment readings expected shortly after. Over in the US investors will be eagerly awaiting inflation data after recent comments from Fed Chair Janet Yellen hinted at considerable price headwinds and with durable goods orders, initial jobless claims and the Kansas City Fed manufacturing index trading activity is expected to remain buoyant throughout the day.

Nikkei 225 rallies to a fresh 15 year high

NKY Index Nikkei 225 Monthly 2015 02 26 07 40 41

Events for today

0700

DE

Mar

GfK Consumer Confidence

0855

DE

Feb

Unemployment Change

1000

EZ

Feb

Bus Climate & Con Sentiment

1330

US

Jan

CPI

1330

US

Jan

Durable Gds & New Orders

1330

US

w/e

Jobless Claims

1400

US

Dec

FHFA House Price Index

1600

US

Feb

Kansas City Fed Manufacturing

2330

JP

Jan

CPI

LT: 

Feb  Copper, Gold, Silver (COMEX)

Chinese mainland stock indices rallied to a four week high after a relatively subdued start to their shortened week as investors speculated that the People’s Bank of China along with policymaker in Beijing would step up efforts to support the economy

More from: Kash Kamal