Morning Bid: Spotlight on rate decisions, China loans

By Jamie McGeever

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

Interest rate decisions in New Zealand and Thailand are the main events for Asian markets on Wednesday along with Chinese bank lending figures, as investors brace for a rocky open following Wall Street’s lackluster performance the previous day.

U.S. stocks closed in the green on Tuesday but only barely, despite the biggest one-day fall in Treasury yields in over a month, and a notable slide in oil prices.

Taken together, a case can be made that investor sentiment is fraying. With many benchmark stock indices and key commodity prices hovering at historic and even record highs, fatigue may be setting in.

Once again, however, Japan seems to be bucking the trend with the looking to test 40,000 points again and make a push to fresh all-time highs.

The yen’s slide back towards 152 per dollar could facilitate that push, but will also probably spark another wave of verbal intervention from Japanese authorities. Actual FX market intervention is a real possibility if 152.00 breaks.

On the data front, wholesale inflation figures from Japan could be the catalyst for dollar/yen testing 152.00, but the main indicator will be Chinese bank lending.

Investors will be hoping for signs of recovery in March from February, when loan growth from a year earlier slowed to a record low 10.1%.

Chinese banks are estimated to have issued 3.56 trillion yuan ($492.11 billion) in net new yuan loans last month, more than double the 1.45 trillion yuan in February, according to a Reuters poll.

On the policy front the Reserve Bank of New Zealand and Bank of Thailand are both widely expected to keep key rates unchanged, meaning signals about the future policy path in the coming months will be more important for local asset markets.

All 29 economists in a Reuters poll expect the RBNZ to leave its official cash rate on hold at 5.50% for a sixth consecutive meeting. Fifteen of the 29 expect the first cut to come by the end of the third quarter and the other 14 forecast the cash rate to remain unchanged until the fourth quarter or later.

Consensus around the BOT staying on hold, meanwhile, is much flakier, with inflation running below target and the economy unexpectedly contracting at the end of last year.

Sixteen out of 26 economists polled by Reuters reckon the BOT will keep its benchmark one-day repurchase rate at 2.50% for a third straight meeting, and the other 10 forecast a quarter-point cut to 2.25%.

That is a drastic change from a February poll when a strong majority of economists expected rates to stay unchanged this quarter and median forecasts showing the first rate cut in Q1 2025.

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

– New Zealand interest rate decision