By Jamie McGeever
(Reuters) – A look at the day ahead in Asian markets from financial markets columnist Jamie McGeever.
Asian markets are off to a nervous start on Monday as concerns grow that last week’s equity selloff could intensify, financial conditions continue to tighten, and investors await economic data from China throughout the week.
It appears that the G20 summit in India will have no discernible impact on the market, and trade is likely to be dominated by politically influenced trade due to US-China tensions. Apple’s 6% decline last week wiped $180 billion off its market cap after news that Beijing had banned government employees from using iPhones at work.
Broad market sentiment is fragile. The Nasdaq fell 2% last week, and the S&P 500, MSCI World and MSCI Asia ex-Japan indexes all fell more than 1%.
The strengthening of financial conditions from higher bond yields and a stronger dollar, and uneasiness about the growing lag effects of the Fed’s rate hikes are coming together in what has historically been a notoriously volatile month for stocks.
According to Goldman Sachs’ real-time index, financial conditions in China, emerging markets and globally are the toughest since last November.
The dollar is at a six-month high, Asian currencies are feeling the heat, and traders are on alert for intervention – India’s rupee closed at a record low on Thursday and the Japanese yen, Philippine peso and Thai baht are at their lowest this year. Are at level. ,
Key economic indicators across the region this week – including Indian trade and inflation, Australian unemployment, Indonesia retail sales, and Japanese industrial production and machinery orders – may also provide direction for currencies.
This week the focus of economic data will be on China. Beijing often focuses on releasing key indicators in short bursts – often referred to as ‘China data dumps’ – but this is particularly heavy-handed.
Money supply, credit growth, social financing (a broad measure of credit and liquidity in the economy), retail sales, industrial production, unemployment, house prices and real estate investment are all due to be released by September 15.
It follows producer and consumer price inflation data on Saturday that suggested deflation pressures remain sticky. The annual PPI was negative for the 11th consecutive month, and the annual CPI rose only 0.1%, below forecasts for a 0.2% increase.
The state of China’s economy will become much clearer by the end of the week, as well as the task facing authorities to provide the monetary and fiscal stimulus needed to keep Beijing’s 5% GDP growth target on track this year. The level will also become clear.
But complicating things is the yuan, which is at a 16-year low. Further policy easing will put it under even greater pressure, increasing the risk of FX depreciation, asset market weakness and capital flight.
Here are the key developments that could provide greater direction to the market on Monday:
– Malaysia Industrial Production (July)
– Japan Money Supply (August)
– US 3-year note auction
(By Jamie McGeever; Editing by Dianne Craft)