April 5 (Reuters) – A look at the day ahead in Asian markets by Jamie McGeever.
A smattering of inflation data, PMIs and a rate decision will keep investors’ attention in Wednesday’s Asian session amid an increasingly gloomy backdrop following recent warnings that the US economy is losing steam.
Annual consumer price inflation in Philippines and Thailand likely to slow; Purchasing Managers’ Index surveys for Japan, Australia and India are released; and the Reserve Bank of New Zealand is expected to slow the pace of rate hikes to 25 basis points.
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Investors go on the defensive on Wednesday. US stocks, the dollar and Treasury yields all tumbled on Tuesday after numbers showed a surprise drop in US job vacancies to their lowest level in nearly two years.
The monthly “JOLTS” report comes a day after figures showed that not only did US manufacturing activity contract in March at its fastest rate in three years, but that all components of the Institute for Supply Management’s survey fell below growth for the first time -/Shrinkage threshold of 50 fell times since 2009.
Global factory activity and global demand are weakening.
Rates markets are no longer expecting the Fed to hike rates again and are pricing in 75 basis points of easing this year. But falling yields and heightened rate cut expectations are not supporting equities and risky assets – fears of a recession are mounting.
If the Fed pauses the tightening campaign, it will follow the Reserve Bank of Australia, which left interest rates unchanged at 3.6% to break a streak of 10 straight hikes.
Australian policymakers said they wanted time to gauge the impact of past hikes as the economy slows and inflation peaks. A similar report could come from the Reserve Bank of New Zealand on Wednesday, although it is still expected to rise 25 basis points.
Investors will check the accompanying commentary for signs of an end to the tightening cycle. A slowdown in the US and global economies and the reverberations of last month’s bank shock could tempt policymakers to ease up sooner rather than later.
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Here are three key developments that could give markets more direction on Wednesday:
– Interest rate decision in New Zealand
– Inflation in the Philippines (March)
– Thailand Inflation (March)
By Jamie McGeever; Editing by Josie Kao
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Jamie McGeever
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