Nov 17 (Reuters) – A look at the day ahead in Asian markets from financial markets columnist Jamie McGeever.
Asian markets are set to finish a positive week on a more subdued note on Friday, with concerns over world growth countering any optimism from a further slide in US Treasury yields and global oil prices.
The Asia Pacific economic data and policy calendar is very light on Friday, with only the Malaysian third quarter GDP and current account reports scheduled to be released.
Malaysia’s economy probably grew at a 3.0% annual rate in the July-September period, slightly faster than 2.9% in the second quarter, according to a Reuters poll. The ringgit traded around 4.6850 per dollar ahead of the data, close to last month’s 25-year low of 4.79 per dollar.
Anyone expecting market-changing news from the Asia Pacific Economic Cooperation forum in San Francisco may have been disappointed. The gathering of APEC leaders has been cordial and cooperative, but viewed through an economic and market lens, it lacks any real substance.
To a large extent, the same applies to the much-awaited summit between US President Joe Biden and Chinese President Xi Jinping.
Investors’ concerns about the health of China’s economy refuse to subside. The latest data show house prices fell for a fourth month in October and may fall further, and weak Japanese exports were partly due to soft demand from China.
China’s CSI 300 blue chip index is headed for a slight decline, the first in four weeks, bucking broader regional trends.
The MSCI Asia ex-Japan equity index is up 3.5% so far this week, its best week since July and third-best week of the year, and Japan’s Nikkei 225 is on track for a third consecutive weekly rise, which This is its best performance since June.
The backdrop of Friday’s market activity in Asia is evidence that deflationary pressures are spreading into the US economy and beyond.
Data on Thursday showed US unemployment claims rose to a three-month high and industrial output fell at the fastest rate this year. Capacity utilization fell to a two-year low, and global oil prices also fell sharply again – Brent crude futures hit a four-month low and are now down 16% year-to-date.
Lower inflation puts pressure on interest rates and market borrowing costs, and US Treasury yields fall by 10 basis points across the curve.
All else equal, this weakens the dollar and favors risk assets like equities and emerging assets. But Wall Street failed to bounce back and the dollar held its ground on Thursday, prompting a more defensive and cautious stance from many investors.
If it reaches Asia on Friday, the week could pass with light showers rather than a bang.
Here are the key developments that could provide greater direction to the market on Friday:
– Malaysia current account (Q3)
– Malaysia GDP (Q3)
-The Fed’s Barr, Collins, Daley and Goolsby speak
By Jamie McGeever; Editing by Josie Cao
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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which is committed to integrity, independence and freedom from bias under the Trust Principles.
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