Asia-Pacific markets gain in early trade as investors focus on central bank meetings

  • A number of high profile central banks are due to hold their monetary policy meetings this week, including the U.S. Federal Reserve, the Bank of Japan, the Bank of England and the European Central Bank.
  • Another test for markets this week would be whether the latest developments around the new Covid strain omicron can "derail risk sentiment," according to Ray Attrill from the National Australia Bank.

SINGAPORE — Asia-Pacific markets jumped in morning trade on Monday as investors turn their focus to a number of monetary policy meetings happening this week.

In Japan, the Nikkei 225 rose 0.86% while the Topix index added 0.51%. South Korea's Kospi added 0.53% and Australia's benchmark ASX 200 rose 0.39%.

A number of high profile central banks are due to hold their monetary policy meetings this week, including the U.S. Federal Reserve, the Bank of Japan, the Bank of England and the European Central Bank.

"Accelerated Fed tapering seems assured when the [Federal Open Market Committee] meets this week," ANZ Research analysts wrote in an early morning note.

They said they anticipate the U.S. central bank to reduce its monthly bond purchases by $30 billion a month starting in January compared with $15 billion currently.

"The Fed's guidance around transitory inflation will be dropped, and the new inflation guidance is likely to reflect a clear determination to act accordingly to bring inflation under control," the analysts added.

On Friday, data showed inflation in the United States accelerated at its fastest pace since 1982. Investors shrugged off the print and markets reacted positively to the report.

"Markets were evidently braced for even worse news," said Ray Attrill, head of foreign-exchange strategy at the National Australia Bank, in a morning note.

Attrill said that the test for markets this week, apart from the various central bank meetings, is whether the latest developments around the new Covid strain omicron can "derail risk sentiment."

In the U.K., the government raised the coronavirus threat level Sunday and warned the rapid spread of the omicron strain pushed the country into risky territory, the Associated Press reported. Prime Minister Boris Johnson reportedly said the U.K. faces a "tidal wave" of Covid cases caused by the new variant.

Elsewhere, Israeli researchers said that they found a three-shot course of the Pfizer-BioNTech Covid-19 vaccine provided significant protection against the omicron variant, Reuters reported. The findings were similar to those presented by the above-mentioned drugmakers.

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In the currency market, the U.S. dollar traded near flat against a basket of its peers. The dollar index was at 96.102, little changed from its previous close 96.097.

The Japanese yen changed hands at 113.51 per dollar, weakening from an earlier level around 113.25, while the Australian dollar fell 0.13% to $0.7162.

Oil prices rose Monday during Asian trading hours, with U.S. crude up 1.16% at $72.5 a barrel.

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