Sep 11 (Reuters) – A look at the day ahead in Asian markets from Jamie MacGyver, financial markets columnist.
Asian markets are preparing for a nervous open on Monday as concerns mount that stock sell-off accelerated last week, continued tightening in financial conditions, and investors brace for a batch of economic data from China throughout the week.
There seems to be no apparent impact on the market from the G20 summit in India, and tensions between the US and China are likely to dominate the politically influenced trading. Last week, a 6% drop in Apple shares wiped $180 billion from its market value after news that Beijing had banned government employees from using iPhones at work.
The broader market sentiment is fragile. The Nasdaq fell 2% last week, and the S&P 500, MSCI World Index, and MSCI Asian Index excluding Japan fell more than 1%.
Tightening financial conditions from rising bond yields and a strong dollar, and concern about the late effects of looming interest rate hikes by the Federal Reserve, come together in what has been an historically very volatile month for stocks.
According to Goldman Sachs real-time indicators, financial conditions in China, emerging markets and the world are now the most tightening since last November.
Dollar Hits Six-Month High, Asian Currencies Are Nervous, Traders Are Alert To Step In – The Indian Rupee hit a record low closing level on Thursday, and the Japanese Yen, Philippine Peso, and Thai Baht all hit year-lows. .
Currencies may also take direction from a host of key economic indicators across the region this week – Indian Trade and Inflation, Australian Unemployment, Indonesia Retail Sales, Japanese Industrial Production and Machinery Orders.
The spotlight on economic data this week will be on China. Beijing often concentrates the issuance of major indicators in short periods – often referred to as the “Chinese data warehouse” – but this period is particularly heavy.
Money Supply, Loan Growth, Social Finance (a broad measure of credit and liquidity in an economy), Retail Sales, Industrial Production, Unemployment, House Prices and Fixed Asset Investment are due out on September 15th.
This follows Saturday’s producer and consumer price inflation figures which suggested deflationary pressures are holding. The annualized PPI was negative for the 11th consecutive month, and the annualized CPI rose only 0.1%, falling short of expectations for an increase of 0.2%.
The state of the Chinese economy will be clearer by the end of the week, as will the scale of the task facing the authorities to provide the necessary monetary and fiscal stimulus to keep Beijing’s target of 5% GDP growth this year in sight.
Complicating matters, however, is the yuan, which has reached a 16-year low. Further policy easing would put it under even more downward pressure, threatening a downward spiral of foreign exchange depreciation, weak asset markets and capital flight.
Here are the key developments that could provide more direction to the markets on Monday:
– Industrial Production in Malaysia (July)
Money supply in Japan (August)
3-year US bond auction
Written by Jimmy MacGyver; Editing by Diane Craft
Our standards: Thomson Reuters Principles of Trust.
The opinions expressed are those of the author. They do not reflect the views of Reuters News, which is committed, under the Trust Principles, to integrity, independence and freedom from bias.