SINGAPORE, Dec 27 (Reuters) - Following is the view from Reuters Asia editors on the news that is likely to matter most this week:
CHINA RATE RISE
The message that markets probably should come away with after Beijing's Christmas Day interest rate increase is that China is very serious about clamping down on inflation and will use any tool at its disposal, at any time, to do so. China's move may punish short-term money that had been chasing the euro lower against the Australian dollar in the last few weeks, may possibly jerk dollar/yuan NDFs lower and trigger some profit taking in commodity-related shares. If it wasn't already, risk is probably off for the few trading days left in 2010.
KOREA PENINSULA CRISIS
Tension is still running high, but it doesn't seem like we're on the brink of war any more - at least for now. North Korea will keep on denouncing South Korea, and South Korea will keep on talking tough as President Lee seeks to maintain his political standing. Regional powers - ie China, Japan and the United States - will try and boost diplomatic efforts to keep things calm, especially before U.S. Defense Secretary Gates is due to visit the region, reportedly, in early January. Six-party talks don't look like they're going anywhere, anytime soon.
OIL and INDIAN DIESEL - Oil is over $90 and within sight of $100. How will fuel price reforms since the rally to $147 in 2007-2008 affect demand as governments pass on more of the burden of high oil prices to consumers. Indian government ministers meeting on Dec. 30 may decide to raise diesel prices. Diesel use far outweighs gasoline use in India, so this one closely watched for potential impact on politics, the economy and demand. However, with inflation creeping up again, ministers may keep prices on hold.
JAPAN-ECONOMY - CPI, industrial production, household spending and unemployment will be released on Dec 28. Manufacturing sector surveys have been positive in October and November and we saw reasonably strong export growth in November, all of which suggests we might see the first month-on-month increase in industrial output in November. That said, the risk of a fall in external demand and therefore another slump in exports is one that would weigh factory output down. The government, fighting to get its budget guidelines compiled, has little room for fiscal spending. The Bank of Japan is in a wait-and-see mode but has limited options too.
RIVERSDALE - Will anyone crash Rio Tinto's $3.9 billion agreed offer for Africa-focused coal miner Riversdale? Tata Steel, which owns a 24-percent stake, is seen as unlikely to accept Rio's offer and the Tata director on Riversdale's board was the only who abstained from recommending the deal last week. International Coal Ventures, an Indian consortium of 5 state-run companies, has appointed Citigroup to assess a possible rival bid. Brazil's CSN is also a major shareholder. Anglo-American and Xstrata are the other two in the frame.
(Compiled by Richard Pullin) Keywords: WEEKAHEAD/ASIA (richard.pullin@thomsonreuters.com; +612-9373-1811;) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
CHINA RATE RISE
The message that markets probably should come away with after Beijing's Christmas Day interest rate increase is that China is very serious about clamping down on inflation and will use any tool at its disposal, at any time, to do so. China's move may punish short-term money that had been chasing the euro lower against the Australian dollar in the last few weeks, may possibly jerk dollar/yuan NDFs lower and trigger some profit taking in commodity-related shares. If it wasn't already, risk is probably off for the few trading days left in 2010.
KOREA PENINSULA CRISIS
Tension is still running high, but it doesn't seem like we're on the brink of war any more - at least for now. North Korea will keep on denouncing South Korea, and South Korea will keep on talking tough as President Lee seeks to maintain his political standing. Regional powers - ie China, Japan and the United States - will try and boost diplomatic efforts to keep things calm, especially before U.S. Defense Secretary Gates is due to visit the region, reportedly, in early January. Six-party talks don't look like they're going anywhere, anytime soon.
OIL and INDIAN DIESEL - Oil is over $90 and within sight of $100. How will fuel price reforms since the rally to $147 in 2007-2008 affect demand as governments pass on more of the burden of high oil prices to consumers. Indian government ministers meeting on Dec. 30 may decide to raise diesel prices. Diesel use far outweighs gasoline use in India, so this one closely watched for potential impact on politics, the economy and demand. However, with inflation creeping up again, ministers may keep prices on hold.
JAPAN-ECONOMY - CPI, industrial production, household spending and unemployment will be released on Dec 28. Manufacturing sector surveys have been positive in October and November and we saw reasonably strong export growth in November, all of which suggests we might see the first month-on-month increase in industrial output in November. That said, the risk of a fall in external demand and therefore another slump in exports is one that would weigh factory output down. The government, fighting to get its budget guidelines compiled, has little room for fiscal spending. The Bank of Japan is in a wait-and-see mode but has limited options too.
RIVERSDALE - Will anyone crash Rio Tinto's $3.9 billion agreed offer for Africa-focused coal miner Riversdale? Tata Steel, which owns a 24-percent stake, is seen as unlikely to accept Rio's offer and the Tata director on Riversdale's board was the only who abstained from recommending the deal last week. International Coal Ventures, an Indian consortium of 5 state-run companies, has appointed Citigroup to assess a possible rival bid. Brazil's CSN is also a major shareholder. Anglo-American and Xstrata are the other two in the frame.
(Compiled by Richard Pullin) Keywords: WEEKAHEAD/ASIA (richard.pullin@thomsonreuters.com; +612-9373-1811;) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.