A look at the day ahead in European and global markets by Kevin Buckland
The rally in semiconductor stocks has circled the globe, almost single-handedly putting Japan’s Nikkei stock average back on track for a second straight weekly advance.
The 1.4% rise in the Japanese benchmark index was only exceeded by the more than 2% increase in Taiwan, home to TSMC, which triggered the buying frenzy with its forecast of sales growth of over 20% this year.
However, mainland China and Hong Kong stocks continued to stand out for all the wrong reasons, losing ground while the rest of the region gained.
Chinese blue chips are on track to fall for a third week in a row as the economic recovery is uneven and disappointment with stimulus measures so far runs high. The CSI 300 fell to a near five-year low on Thursday, gaining 1.4% only on purchases by government-backed funds.
Japan is in stark contrast, with an increase of more than 7% year to date, putting the country well ahead of its key competitors, most of which will be in the red in 2024.
A sharp fall in the yen is improving the profit outlook for many major Japanese exporters, while a normalization of the Bank of Japan’s monetary policy has become a distant prospect as economic data shows price pressures are easing.
Economists unanimously expect there will be no change after the BOJ interest rate meeting next Tuesday.
Meanwhile, European chip stocks have already recovered, but it will take much more than Thursday’s 0.59% rise to save the STOXX 600 from a loss this week.
The Davos forum is entering its final day, and ECB President Christine Lagarde is on the podium. However, she has already dampened market enthusiasm with her comments on Wednesday suggesting that rate cuts will not come as quickly as investors had hoped, and she appears unlikely to back down today.
British markets will be tested by retail sales data after a higher-than-expected inflation rate midweek increased speculation that the Bank of England will cut interest rates more slowly than the Fed and ECB, boosting sterling and caused shares to fall to multi-week lows.
This article is originally published on ch.marketscreener.com