Marketmind: What banking crisis? Ending Q1 on a high

By Jamie McGeever

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

Asian markets go into the final trading day of the quarter in a buoyant mood, ready to face Friday’s barrowload of regional economic data with a sense of optimism and resilience that would barely have been believable a few weeks ago.

Maybe it is just window-dressing for the end of the quarter, but investors are driving risky assets higher across the board, doing their best to make the banking crisis of March 2023 look like a blip in the rear-view mirror.

Q1 world markets, https://fingfx.thomsonreuters.com/gfx/mkt/klpygqylxpg/Three.PNG

Another solid performance on Wall Street on Thursday should set the tone for Asian stocks on Friday, with tech again leading the way. U.S. financials was the only S&P 500 sector to fall on Thursday, but they are still up 3% this week, the best week since January.

It remains to be seen how successful U.S. authorities have been in ring-fencing banks from contagion, and there is little doubt that deteriorating credit conditions will be a drag on growth.

Right now though, it’s ‘risk on’ globally – the MSCI Asia ex-Japan equity index is up three weeks in a row, the MSCI World is having its best week since mid-January, and the Hang Seng tech index is at a six-week high.

Although bond yields and the Fed rate outlook have picked up in the last two weeks, they are still significantly below the historic peaks pre-banking shock. Tech, in particular, is on a roll.

Further indications that China is reversing the sweeping regulatory crackdown on its technology sector of recent years is also adding fuel to the rally.

JD.com shares jump 8% on restructuring news, https://fingfx.thomsonreuters.com/gfx/mkt/zgvobaxozpd/JD.png

After investors gave Alibaba’s restructuring plans this week a big thumbs up, e-commerce firm JD.com said on Thursday it plans to spin off its property and industrial units and list them on the Hong Kong Stock Exchange.

U.S.-listed shares in JD.com jumped 8% on Thursday, U.S.-listed shares of Alibaba are up 20% in the last three sessions, the Nasdaq 100 is flirting with a bull market – up more than 20% from its December low – and the wider Nasdaq is up 15% this year.

On the Asian data front on Friday, investors have no shortage of potential market-movers, including: Chinese PMIs for March; Japanese unemployment, retail sales and industrial production; and private sector credit figures from Australia.

Emerging market currencies, https://fingfx.thomsonreuters.com/gfx/mkt/movakwarqva/Pasted%20image%201680194665862.png

Here are three key developments that could provide more direction to markets on Friday:

– China NBS manufacturing and services PMI (March)

– Euro zone flash CPI inflation (March)

– U.S. PCE inflation (February)

(By Jamie McGeever; Editing by Josie Kao)