Sensex Rebounds But Heads for Weekly Losses

The BSE Sensex jumped 754 points or 1.31% to 57,969 in early trade on Friday following a noticeable retreat in the prior session, amid gains in energy and banking stocks. Shares of Bharti Airtel surged 1.8% after the company said Alphabet Inc's Google would invest up to USD 1 billion in the telecom operator. Risk appetite was mainly lifted by upbeat latest US economic data. The world’s largest economy expanded at an annualized rate of 6.9% in Q4, beating market estimates of a 5.5% rise; while US weekly jobless claims fell for the first time in a month, suggesting the impact of the Omicron variant on the labor market is starting to recede. For the week, however, th index is heading for a 1.8% slump, dragged down by the prospect of a more hawkish Federal Reserve, mixed corporate earnings, and geopolitical unrest in Ukraine.

India 10Y Bond Yield Hits 25-month High

India 10 Year Government Bond Yeld increased to a 25-month high of 6.752%, tracking a general rise in global bond yields after the Federal Reserve set a more hawkish tone in its last meeting and signaled rate hikes from March. In India, the central bank (RBI) kept the interest rate at a record low of 4% last month and pledged to maintain an accommodative stance to support economic recovery. Meanwhile, investors await India’s budget due next week and the outcome of RBI’s monetary policy committee meeting scheduled from February 7th to 9th.

Malaysia Exports Rise to Fresh Record High

Exports from Malaysia increased by 29.2 percent from a year earlier to a new record high of MYR 123.8 billion in December 2021, beating market consensus of a 24.6 percent rise, following a 32.4 percent growth in the prior month, amid a further recovery in global demand and surging commodity prices. .

Malaysia Posts Largest Trade Surplus on Record

Malaysia's trade surplus widened sharply to a record high of MYR 31.0 billion in December 2021 from MYR 20.7 billion in the same month a year ago, and beating market expectations of MYR 22.5 billion, amid strong global trade ahead of the new year holidays.

Malaysia Import Growth Below Forecasts

Imports to Malaysia expanded 23.6% yoy to MYR 92.9 billion in December 2021, below market consensus of 27.3% and after a 38% jump in November. Still, this was the 11th straight month of double-digit growth in inbound shipments, as domestic consumption stayed robust following a surge in COVID-19 vaccinations. Arrivals of intermediate goods gained 27.1%, supported by industrial supplies, n.e.s. primary, parts and accessories of capital goods; and fuel & lubricants, primary. Also, purchases of capital goods grew 21% percent, lifted by capital goods (except transport equipment); and those of consumption goods rose 13.1%, due to food & beverages, process, mainly for household consumption, and non-durables. By country, imports went up from China (22.3%), Singapore (36.9%), the EU (24.1%), Taiwan (42.8%), the US (20.6%), and the ASEAN countries (36.7%). For the whole year, purchases rose 23.6% from the same period of 2020 to MYR 987.24 billion.

Japan 10Y Bond Yield Hits 48-week High

Japan 10 Year Government Bond Yeld increased to a 48-week high of 0.163%

China Stocks Subdued Ahead of Week-Long Holiday

The Shanghai Composite edged up 0.15% to around 3,400 while the Shenzhen Component gained 0.6% to 13,480 on Friday, as investors avoided making big bets ahead of the week-long Lunar New Year holiday. However, both indices are on track to drop more than 3% for the week, extending year-to-date losses for the tech-heavy Shenzhen Index to more than 9% as prospects of tighter policy from the US Federal Reserve added to concerns over the Chinese market’s regulatory headwinds. While an increasing number of Wall Street firms turned positive on China due to monetary easing, the country’s equity markets have yet to recover from sharp losses. The People’s Bank of China recently slashed several key short- and medium-term interest rates to support economic growth, with analysts expecting more easing measures in the coming months. A string of reports from Chinese state-backed media also called on investors this week not to panic, citing looser monetary policy.

Tokyo Inflation Slows, Bolsters Dovish BOJ Stance

Consumer prices in Tokyo, Japan, excluding those for fresh food, rose 0.2% in January 2022 from a year earlier, weakening for the first time since April 2021 and slowing from a 0.5% gain in December. Inflation in the capital city also fell below consensus forecast for a 0.3% increase, due largely to stagnating hotel prices, even as energy prices continued to rise. The slowdown in Tokyo inflation bolstered the Bank of Japan’s case for continued stimulus and reflected how different Japan is from other major economies, where surging prices forced central banks to dial back pandemic-era support. The BOJ has maintained a firm stance of keeping its ultra-loose monetary policy to achieve the 2% price stability target.

Singapore Q4 Jobless Rate Lowest in 2 Years

Singapore’s seasonally adjusted fell to 2.4% in Q4 2021 from a final 2.6% in Q3, a flash figure showed. This was the lowest jobless rate since Q4 2019, as the economy recovered further from disruptions caused by COVID-19. For full 2021, the jobless rate dropped to 2.6 percent from 3.0 percent in 2020, with unemployment declining for both residents (3.5% vs 4.1%) and citizens (3.7% vs 4.2%).

Japan’s Nikkei Set for Fourth Weekly Decline

The Nikkei 225 Index gained 1.5% to around 26,570 while the broader Topix Index rose 1.3% to 1,865 on Friday, as investors covered shorts and scooped up battered shares a day after an accelerated selling in Japanese tech stocks pulled the Nikkei to a 14-month low. However, the benchmark index was still on track to lose about 3% for its fourth weekly decline as equities came under pressure from a Federal Reserve-led global tightening cycle. The US central bank indicated that it would likely hike interest rates in March and begin reducing its balance sheet soon after. All sectors of the Japanese market participated in the rebound, led by consumer, retail and manufacturing firms. Notable gainers include Toyota (3.3%), Fast Retailing (2%) and Fanuc Corp (1.7%). Meanwhile, momentum in Tokyo inflation weakened in January, falling below market expectations and bolstering the Bank of Japan’s case for continued stimulus.