A passer-by walks past an electric monitor showing the stock price index of different countries in front of a bank in Tokyo, Japan, March 22, 2023. REUTERS/Issei Kato/File Photo Acquire License Rights
8 September (Reuters) – A look at the day ahead in Asian markets from financial markets columnist Jamie McGeever.
Asian markets head into the last trading day of the week, unable to escape the gloom amid concerns over high US bond yields, a buoyant dollar, China’s slowdown and now the potential inflationary impact of rising oil prices.
Brent crude is now higher than a year ago, the first time since January that year-on-year price changes have been positive. In other words, all else being equal, oil is now contributing to headline inflation rather than diluting it.
Highlights from Friday’s regional economic data calendar include an expected downgrade in Japan’s second-quarter GDP growth, as well as the latest trade, current account and bank credit data from Japan, all of which could move the ailing yen.
Investors in Asia may not be able to switch off completely at Friday’s close either – the G20 summit of leaders in New Delhi starts on Saturday and Chinese figures on consumer and producer price inflation are also due out on the same day.
After a down day on Thursday, equities and risk assets will remain on the defensive at Friday’s open, although government bond and oil yields fell somewhat from recent highs.
New York Fed President John Williams said it was an “open question” whether the Fed would hike rates again, but strong data on Thursday’s jobless claims sent rate traders into more hawkish sentiment and the dollar hit its highest As of March.
China continues to weigh on sentiment and market performance.
The onshore yuan fell to its weakest level since December 2007 on Thursday, rising to 7.33 per dollar, increasing pressure on authorities to halt its decline. Unfortunately for Beijing, it also highlights the limited options.
The faltering economy needs stimulus, but any meaningful policy easing will almost certainly push the yuan lower. The weaker the yuan weakens, the greater the risk that investors will pull money out of China, deepening a fatal loop of currency depreciation, asset market weakness and capital flight.
The G20 summit of heads of state and government will open in New Delhi on Saturday. US President Joe Biden will be there and Chinese President Xi Jinping will not, a situation that will do nothing to improve the delicate and deteriorating relationship between the two superpowers.
In the latest twist – and strong symbolism – is Beijing’s crackdown on state employees who use Apple iPhones at work. Apple shares fell 2.9% on Thursday, mostly dragging Wall Street lower.
World leaders and their cronies will no doubt be busy, but any shopping sprees they can undertake will be worth it – the Indian rupee ended at a record low of 83.21 per dollar on Thursday despite likely central bank intervention .
Here are key developments that could give markets more direction on Friday:
– Japanese GDP (Q2, revised)
– Japanese Current Account (July)
– Japanese bank loans (August)
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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