Asian currencies and stocks have negative start in 2024, key economic data

Asian markets experienced a sluggish start to the year, with most currencies and stocks facing downward pressure. The South Korean won led the retreat, declining by 1.1 per cent, followed by a 0.5 per cent depreciation of the Indonesian rupiah. Taiwanese equities, despite an impressive 2023 performance with a 27 per cent surge, dipped by 0.7 per cent on Tuesday.

Market focus pivoted towards forthcoming US economic indicators, especially job data and nonfarm payrolls, anticipated to offer insights into future interest rate trajectories. Eyes are set on the Federal Reserve's minutes from their last policy meeting, where an unexpectedly dovish stance was adopted, scheduled for Thursday. Analysts believe these minutes will shed light on potential 2024 rate cuts, with an 86 per cent probability of cuts commencing in March, signifying an expected easing of more than 150 basis points throughout the year.

Poon Panichpibool, a markets strategist at Krung Thai Bank, anticipated a cautious or profit-taking stance in the market preceding crucial US economic data. Additionally, inflation data from Asian nations such as the Philippines and Thailand will feature prominently this week. Indonesia's annual inflation came in lower than anticipated in December, mirroring a similar trend of easing inflation observed in other Asian countries like South Korea.

Despite the easing inflationary trend offering some breathing space to Asian central banks, Christopher Wong, an FX strategist at OCBC, expressed doubts about immediate rate cuts. He suggested that central banks might maintain the status quo, emphasising the need for a more comprehensive view rather than reacting hastily to singular data points.

Among the currencies, the Philippine peso and the Thai baht declined by 0.3 per cent and 0.6 per cent, respectively. Contrarily, Thai stocks rallied by 0.7 per cent for the day after a challenging 2023. Singapore's economy exhibited growth of 2.8 per cent in the fourth quarter, surpassing some economists' expectations, contributing to the stability of the Singapore dollar, which, however, witnessed a 0.2 per cent decline alongside a 0.3 per cent retreat in equities.

(with Reuters inputs)