U.S.-China crisis?

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Feb 6 (Reuters) – A look at the day ahead in Asian markets from Jamie McGeever.

Traders in Asia can expect a choppy start to the week as they absorb Friday’s sell-off on Wall Street following a freakishly strong U.S. jobs report and heightened geopolitical tensions after a U.S. fighter jet shot down a suspected Chinese spy balloon on Saturday.

This comes ahead of a busy week on the regional economic data and events calendar, which includes interest rate decisions from India and Australia, inflation and bank lending data from China, and current account figures from Japan.

Traders in Asia had the weekend to digest the U.S. market action on Friday, and the signals are mixed. Wall Street fell as implied U.S. rates rose and 2023 rate-cut expectations faded, but technical and momentum indicators are positive, market volatility remains low, and “soft landing” hopes are rising.

It comes back to that old conundrum: is good news bad news? Is strong economic data a sign of a healthy economy and therefore positive for earnings, or a red flag because higher interest rates will slow the economy and hit earnings?

Source: reuters