Employees work on the production line at Jingjin filter press factory in Dezhou, Shandong province, China, August 25, 2022. REUTERS/Siyi Liu LICENSES RIGHTS
Aug 31 (Reuters) – A look at the day ahead in Asian markets from financial markets columnist Jamie McGeever.
On Thursday, investors are expecting a flurry of high-quality Asian economic indicators, including the latest official Chinese PMI reports, which could have a big impact on how the region’s markets perform next month.
India’s second quarter GDP, Japanese retail sales and industrial production, Hong Kong retail sales, Australian credit and South Korean industrial production are also available and could potentially transform these countries’ markets, particularly their currencies.
After another day of risk on Wednesday, markets across the region should open positively on Thursday. US GDP figures that were revised downwards reduced US interest rate expectations and the futures markets are now no longer expecting a quarter-point hike by the end of the year.
As a lower dollar and softer US Treasury yields helped ease financial conditions, world stocks rose for the fourth day. They’re up 2.5% this week and are on track for their best week in seven.
Asian equities are up six sessions out of the last seven sessions.
But it’s been a tough month for Asia, in large part due to the financial and economic woes in China. Asian ex-Japan stocks fell 6% in August, their biggest monthly loss since February.
China’s NBS Manufacturing PMI is expected to rise to 49.4 in August from 49.34 in July on Thursday, but that would still be the fifth consecutive month below the key 50.0 mark Separating expansion from contraction.
Service sector activity continues to pick up – marginally – but manufacturing continues to struggle amid weak demand.
The series of measures and steps taken by Chinese authorities and companies to improve investor sentiment and support local markets have had an impact. Chinese stocks posted consecutive gains of 1% or more earlier this week for the first time since January.
For the whole of August, however, the index is likely to fall 5.5%, capital outflows have increased, the currency has depreciated about 2% and an imploding real estate sector has prompted widespread downgrades to the broader growth outlook.
China’s largest private real estate developer Country Garden on Wednesday warned of the risk of default if its financial position deteriorated further, saying it felt “deep regret” for a record 48.9 billion yuan ($6.72 billion) loss in the first half of the year.
Two of China’s largest banks reported sluggish earnings growth on Wednesday, and in another sign Beijing is trying to boost activity, a senior central bank official was quoted as saying banks should increase lending to the private sector.
Here are key developments that could give markets more direction on Thursday:
– China PMIs (August)
– India’s GDP (Q2)
– Japanese Retail Sales and Industrial Production (July)
By Jamie McGeever; Edited by Josie Kao
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The opinions expressed are those of the author. They do not reflect the views of Reuters News, which is committed to integrity, independence and impartiality under the Trust Principles.
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