Pedestrians walk past an electronic board displaying the Nikkei stock average in front of a brokerage firm in Tokyo, Japan, October 31, 2023. REUTERS/Kim Kyung-Hoon/File Photo ACKNOWLEDGE RIGHTS
Nov 15 (Reuters) – A look at the day ahead in Asian markets from financial markets columnist Jamie McGeever.
Asian markets open on Wednesday and stocks, risk assets and investor sentiment around the world are rising after U.S. inflation data cooled on Tuesday, closing the door for further interest rate hikes and paving the way for the economy’s fabled “soft landing.”
Some of the U.S. market moves on Tuesday were stunning: two- and five-year bond yields fell more than 20 basis points; the Nasdaq rose more than 2%; the Russell 2000 index rose 5%, its best day in a year; the dollar fell 1.5% for its worst day in a year; and the Australian and New Zealand dollars each rose 2%.
This is likely to be rocket fuel for Asia on Wednesday, although there is no shortage of event risks.
Key data releases include Japan’s third-quarter GDP and China’s retail sales, industrial production, investment and unemployment numbers for October, as U.S. and Chinese Presidents Joe Biden and Xi Jinping meet at the Asia-Pacific Economic Cooperation Forum meet in San Francisco.
Biden and Xi have met only once so far, and this is Xi’s first visit to the US since 2017. Xi hopes to persuade Biden to ease tariffs and export controls designed to prevent the most advanced semiconductors from being shipped to China.
At a separate dinner with business leaders, he will also try to boost flagging investment by U.S. companies in China. Foreign investors have pulled huge sums out of China this year as the economy has stalled and tensions with the West have risen.
Ahead of their talks, China’s yuan climbed to a three-month high of 7.25 per dollar on Tuesday, rising about 0.5%, its biggest daily gain in two months.
The latest retail sales, industrial production, investment and unemployment figures for October will provide insight into whether China’s economy maintains the surprisingly strong momentum of the third quarter.
Citi’s China economic surprise index has been in positive territory for nearly a month, suggesting activity is increasing or analysts are lowering their expectations. Or a little of both.
Japan’s economic surprise index, on the other hand, has just slipped into negative territory and is at its lowest level since June. The first reading of third-quarter GDP on Wednesday could raise it again – the bar would seem low enough.
Economists expect the economy contracted 0.1% in the April-June period and contracted 0.6% on an annual basis. This would represent a significant slowdown compared to the growth rates of 1.2% and 4.8% in the previous quarter.
Corporate focus in Asia on Wednesday turns to China’s JD.Com and Tencent Holdings’ third-quarter earnings reports. JD.Com is expected to report a 2.3% increase in revenue to CNY249.258 billion and earnings per share of CNY5.77.
Here are key developments that could give markets more direction on Wednesday:
– Japanese GDP (Q3, preliminary)
– China retail sales, industrial production, investment, unemployment (October)
– Presidents Joe Biden and Xi Jinping meet
By Jamie McGeever; Edited by
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