Asian Markets Look to Strong Economic Data for Direction
Nov 6 (Reuters) – Asian markets are expected to build on the positive momentum from last week, with risk assets and investor sentiment receiving a boost from increasing confidence in the U.S. economic “soft landing” and easing financial conditions. The decline in the dollar and U.S. bond yields has contributed to this positive sentiment.
This week, the focus will be on a slew of top-tier economic releases, particularly from China. On Tuesday, October’s import and export figures will be unveiled, followed by the release of bank lending and credit, money supply, and producer and consumer price inflation on Thursday. These data points are expected to provide strong guidance for local assets and give a clearer picture of China’s economic performance in the fourth quarter.
In addition to China, Thailand, the Philippines, Hong Kong, and Indonesia will also release key economic indicators. Thai inflation figures and Indonesian GDP figures will be out on Monday. Indonesia’s quarter-on-quarter growth rate is anticipated to decrease to 1.71% from 3.86%, while annual growth is expected to hold steady just above 5%.
Market participants will also closely monitor the Reserve Bank of Australia’s rate decision on Tuesday. Economists polled by Reuters anticipate a 25 basis point rate hike to 4.35%. The benchmark cash rate has been on hold for the past four meetings as inflation has been surprisingly strong.
The Bank of Korea will publish the minutes from its last policy meeting on Tuesday, while the Bank of Japan will release a summary of board members’ opinions from its October policy meeting on Thursday.
Japanese corporate earnings will also be in focus this week, with particular attention on banks and financial firms in light of the Bank of Japan’s current policy shift. The performance of the yen, which remains weak around 150 per dollar, will play a role in whether the Nikkei retests its recent 33-year high.
While Asian and emerging stocks had their best week since July, gaining around 3%, they underperformed their U.S. and global counterparts, which saw gains of 5% or more. However, given the decline in the dollar and Treasury yields on Friday, there is potential for Asian and emerging markets to catch up and even outperform this week.
Key developments expected on Monday include Indonesia’s GDP for the third quarter, Thailand’s CPI inflation for October, and Japan’s services and composite PMIs for October.
By Jamie McGeever; Editing by Josie Kao
Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.
Source: Reuters