Asia stocks brace for updates on earnings, China economy

Asian stocks traded cautiously on Monday as U.S. earnings season gets into full swing, while a raft of Chinese data will offer insight into how the world’s second-largest economy is recovering.

Markets have also seen a mood shift on the outlook for U.S. interest rates, with CME futures implying an 83% chance the Federal Reserve will hike by a quarter point to 5.0-5.25% in May.

Resilience in core U.S. retail sales and a jump in inflation expectations reported on Friday has led investors to trim the amount of easing expected later this year to around 55 basis points (bp).

“Early April data on the labour market, inflation and consumption all indicate the Fed has more work to do and that a soft or bumpy landing is a greater probability than a sharp and relatively sudden contraction in activity,” said analysts at ANZ in a note.

“Our baseline view is for two more 25 bp hikes and, if data does not start to weaken soon, the market will need to reprice for no rate cuts in the second half of this year.”

This report’s information was first seen on REUTERS; to read more, click this link.