A man wearing a protective mask walks past the headquarters of Bank of Japan amid the coronavirus disease (COVID-19) outbreak in Tokyo
A man wearing a protective mask walks past the headquarters of Bank of Japan in Tokyo, Japan, May 22, 2020. Reuters

A look at the day ahead in Asian markets from Jamie McGeever.

Asian stocks look set to decline for a second consecutive week as a sea of red on Wall Street spills over into Asian trading on Friday.

The MSCI Asia ex-Japan index goes into Friday's session flat for the week, but is unlikely to emerge unscathed from Thursday's 1.4% slide in the S&P 500, 1% fall in the MSCI World index and the latest Tesla-led tech tumble on the Nasdaq.

Japanese inflation is the big regional economic data point for Asia on Friday. Core consumer price inflation is expected to have hit a fresh 40-year high of 3.7% in November, in some ways vindicating the Bank of Japan's shock policy tweak this week.

The BOJ's Christmas surprise has ensured a momentous week for Japanese markets. The Nikkei goes into Friday already down nearly 4%, the yen is up more than 3% and the 10-year JGB yield is up 15 basis points, its biggest rise since 2008.

Inflation may be picking up in Japan but that's in large part due to the yen's weakness this year. The growth picture is less clear, as it is across the continent.

Graphic: Economic surprises -

Japan's economic surprises index is still negative, having rolled over this month. Others, like the China and emerging market indexes, have fallen off a cliff in recent days and are deeply negative.

China's economic surprises index is hovering around its lowest level since June, and the emerging market index this week hit its lowest and most negative level in over a year.

With the U.S. economic surprises index now in negative territory and the lowest since September, growth fears are mounting and risk assets are feeling the heat. Hopes of a Santa rally in equities have all but evaporated.

But wait. The more pedantic observers will note that the (unofficial) Santa rally (officially) refers to the last five trading days of the year and first two of the next year, meaning this one - if it comes - will begin Dec. 23 and end Jan. 4.

There's hope yet.

Three key developments that could provide more direction to markets on Friday:

- Japan CPI inflation (November)

- U.S. PCE inflation (November)

- U.S. U. Mich inflation, consumer expectations (December)