Last week, investors looked past the political drama surrounding former President Donald Trump’s second impeachment trial, sending global stocks to fresh record highs. US futures are currently pointing higher, which suggests more record highs for the likes of the S&P 500 and the Nasdaq 100 when US markets resume trading on Tuesday.

Such gains in risk assets could be helped along by these key events this week:

  • Monday, 15 February: US markets closed for Presidents’ Day; Euro-area industrial production
  • Tuesday, 16 February: Euro-area Q4 GDP; German ZEW survey expectations
  • Wednesday, 17 February: FOMC minutes; US retail sales and industrial production
  • Thursday, 18 February: GameStop saga hearing before House committee; ECB meeting minutes; Walmart Q4 earnings
  • Friday, 19 February: Markit PMIs for US, Euro-area, UK

Asian stocks return on risk-on note

The new trading week is already kicking off on a positive note for Asian markets, with the Nikkei 225 touching the psychologically-important 30,000 mark for the first time since 1990! Japan’s stock benchmark index has climbed about 8.8 percent already so far in 2021, which is line with the MSCI Asia Pacific Index’s 9 percent year-to-date gain.

There appears to be plenty of reasons to be positive over Japanese stocks over the near-term.

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On Monday morning, it announced a better-than-expected Q4 GDP growth of 12.7 percent compared to the previous quarter. Although for the full-year, the economy contracted by 4.8 percent, that is still less than 2009’s 5.7 percent decline following the global financial crisis.

This is testament to the Japanese economy’s ability to recover, once virus-curbing measures are removed.

Japan has imposed a state of emergency on Tokyo and other big cities, which suggests another economic contraction for this quarter. However, with vaccination efforts set to begin starting this Wednesday, the world’s third largest economy could well rebound in the coming quarter, especially if it can demonstrate the same resilience that it had shown in the final quarter of 2020.

Post-Lunar New Year catch up?

Although Hong Kong and China’s stock markets will not reopen until later this week, they too could join the risk-on party, should this momentum hold over the coming days.

With the Hang Seng index having already broken out of its downtrend which began in early 2018, it is now coming up to a key resistance level around the 30,250 mark. This resistance region held fast in April 2019 and it remains to be seen whether the same pattern will play out once more over the near-term.

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