Asia shares brace for trio of rate meetings, China steps

Asian shares on Monday braced for an action-packed week of earnings and central bank meetings that will likely see higher interest rates in Europe and the United States, and just possibly the end of the monetary tightening cycle in both.

Markets are fully priced for quarter-point hikes from the U.S. Federal Reserve and European Central Bank, so the focus will be on what Fed Chair Jerome Powell and ECB President Christine Lagarde say about the future.

“For both, we expect this to mark the last hike in the cycle, though neither Lagarde or Powell is likely to signal that the peak is in, instead retaining hawkish tones and remaining data-dependent,” said analyst John Briggs at NatWest Markets.

“But activity and inflation data in both regions have softened enough, and are likely to soften further, to justify an end of the tightening cycle.”

The odd man out will be the Bank of Japan which meets on Friday and is thought likely to keep its super-loose policy intact, but some Western banks are speculating on a tweak to its yield curve control stance.

Reuters reported last week that BOJ policymakers prefer to scrutinise more data to ensure wages and the inflation rate keep rising before changing policy, though the decision could still be a close call.

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