Nov. 13 (Reuters) – Financial markets columnist Jamie McGeever discusses the future outlook for Asian markets.
Asian markets should start the week on Monday, boosted by strong gains on Wall Street on Friday, with the Nasdaq up more than 2%, its best day since May.
This is a big week for China watchers, with a U.S.-China presidential meeting, a slew of major economic data, and blue-chip company earnings releases all scheduled for the next five days.
Other economic policy highlights from across the continent this week include Japan’s preliminary third-quarter GDP numbers, India’s inflation and Thursday’s Philippine central bank policy decision.
Asian markets have room for upside after the MSCI Asia-Pacific Ex-Japan Index fell 0.5% last week, underperforming the broader MSCI Emerging Markets Index, which ended flat this week. That’s for sure.
According to the Goldman Sachs Financial Conditions Index (FCI), financial conditions are also generally easing. Some indexes, including the China Index and the Emerging Markets Composite Index, fell to three-month lows last week.
Perhaps the most interesting of all Goldman’s FCIs is its Japan Index. It fell to 96.78 on Friday, matching the lows reached on July 3rd and 4th. Remarkably, this is the lowest level since March 1990.
According to this indicator, Japan’s financial conditions are the most relaxed they have been in about 34 years. This is the combined effect of a weaker yen, recent stock market highs in 33 years, negative interest rates, and significantly negative real bond yields.
In theory, this is inflation and should boost growth. Inflation is relatively sticky and the Bank of Japan is gradually moving away from ultra-easy policy, but economic activity has not met analysts’ expectations.
Citi’s Economic Surprise Index for Japan turned negative last week, its lowest level since June. Meanwhile, major Japanese companies such as Mizuho, Mitsubishi UFJ, and Sumitomo have announced their financial results this week.
This week’s China news flow could be huge.
On the political front, US President Joe Biden and Chinese President Xi Jinping will meet face-to-face this week at the Asia-Pacific Economic Cooperation (APEC) summit to be held in San Francisco from November 15th to 17th.
The economic data pipeline is also packed with top-level releases. These include money supply, lending, and “total social financing,” which is essentially a broad measure of credit and liquidity in the economy, but Wednesday’s market also showed October retail sales, industrial production, and unemployment rates. statistics will be published.
Some of China’s biggest companies are scheduled to release their latest financial results this week. These include JD.com, Tencent Holdings, Alibaba Group, and Lenovo.
Where do Chinese stocks fit against all this?
The blue-chip CSI 300 index rose 0.066% last week, barely staying in positive territory, but enough for a third straight week of gains and its highest since March. Over the past three weeks, however, the index has not been able to recoup a 4.1% drop from the week ended October 20.
Here are the key trends that could give further direction to the market on Monday:
– India CPI inflation rate (October)
– APEC finance ministers meet in San Francisco
・Japanese corporate goods prices (October)
Written by Jamie McGeever.Editing: Diane Craft
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