by Jamie McGeever
(Reuters) – A look at the day ahead in Asian markets from financial markets columnist Jamie McGeever.
Investors await a flurry of top-tier Asian economic indicators on Thursday, including the latest official Chinese Purchasing Managers’ Index report, which could go a long way in determining how the region’s markets will flow next month.
India’s Q2 GDP, Japanese retail sales and industrial production, Hong Kong retail sales, Australian debt, and South Korean industrial production are also progressing, which could further propel markets in these countries, especially their currencies.
After another ‘risk on’ day on Wednesday, markets across the region should open on a positive note on Thursday. A downward revision in US GDP data dented US interest rate expectations and futures markets are no longer expecting a quarter-point hike by the end of the year.
World stocks rose for a fourth day, helped by a lower dollar and softer US Treasury yields easing financial conditions. They’re up 2.5% this week, on course for their best week in seven.
Asian shares are up in six of the last seven sessions.
But it’s been a tough month for Asia, mainly due to China’s financial and economic problems. Asian shares excluding Japan fell 6% in August, their biggest monthly losses since February.
China’s NBS manufacturing PMI on Thursday is expected to rise from 49.34 in July to 49.4 in August, but it will still be the fifth consecutive month below the key 50.0 level that separates expansion from contraction.
Services sector activity continues to grow – but manufacturing is struggling due to weak demand.
The series of measures and steps taken by Chinese authorities and firms to boost investor sentiment and support local markets have had an impact. Earlier this week Chinese shares posted back-to-back gains of 1% or more for the first time since January.
But the index as a whole is on track to decline 5.5% in August, capital outflows have accelerated, the currency has depreciated nearly 2% and property sector slumps have prompted a massive downgrade in the broader growth outlook .
Country Garden, China’s biggest private property developer, warned on Wednesday it was at risk of default if its financials continued to deteriorate and said it was bracing for a record loss of 48.9 billion yuan ($6.72 billion) in the first half of the year. “Feeling Deeply Remorseful”.
China’s two biggest banks reported slower profit growth on Wednesday, and in a further sign of Beijing trying to spur activity, a top central bank official was quoted as saying banks needed to boost lending to the private sector. Giving should be increased.
Here are the key developments that could provide more direction to the market on Thursday:
– China PMI (Aug)
– India GDP (Q2)
– Japan Retail Sales and Industrial Production (July)
(By Jamie McGeever; Editing by Josie Cao)