Marketmind: The fortunes of G3 central banks and China's Politburo

More than three-quarters of economists polled by Reuters expect the Bank of Japan to keep policy unchanged, including its yield control program. Bank of Japan Governor Kazuo Ueda said he was determined to maintain massive monetary stimulus even as inflation continued to exceed the central bank’s 2% target. In a symbolic development last week, headline consumer inflation in Japan rose on an annualized basis, but the scars of the BOJ’s deflationary war run deep, so investors’ hopes for an end to ultra-loose policy were further delayed. The central bank has been reluctant to ease policy as investors are pinning their hopes on fiscal stimulus from Beijing as the already weak yuan could face more selling pressure. And it has to be a major boost.

Measures announced on Friday to help boost sales of cars and electronics failed to impress investors, with foreigners shunning Chinese financial assets despite their relative cheapness.

But the economic, financial, political and social challenges facing Beijing make Chinese stocks likely to become cheaper before foreign investors start buying again en masse. Monday’s Asian economic data calendar and potential market movers will be PMIs from Japan and Australia, as well as the latest inflation data from Malaysia and Singapore.

Malaysia’s inflation rate is expected to slow to 2.4% in June from 2.8% in May, the lowest since last April. Singapore’s inflation is seen falling to 4.52% – the lowest since February last year – from 5.11%.

Here are key developments that could provide more direction to markets on Monday: – Japan PMIs (July)

– Australia PMIs (July) – Singapore inflation (June)

(By Jamie McGeever; Editing by Diane Craft)