May 23 (Reuters) – A look at the coming days in Asian markets from Jamie McGiver.
Creeping optimism that a deal will be reached on the US debt limit standoff seems to be enough to keep investors’ risk appetite up, although Asian markets could be volatile on Tuesday.
Flash Purchasing Managers’ Index surveys for Australia and Japan will be released on Tuesday. Services sector activity has been fairly stable in both countries in recent months, but factory activity has been shrinking.
Any sign of downside could be the excuse that investors need to take some profit from the recent rally in stocks and risk assets, especially in Japan.
Japanese shares are strong. The Nikkei joined the broader Topix index last week and hit a new 33-year high, closing above the 31,000 mark on Monday for the first time since August 1990.
The index has declined only five days in the last 29 trading sessions, and is up 10% in three weeks. This coincides with the yen falling to its 2023 low – the cheaper currency making it more attractive for foreign investors to buy Japanese assets.
A pause for breath in both the markets would not be a big surprise. Similarly, could the dollar correct itself?
US-China ties took a turn for the worse, meanwhile, as Beijing late on Sunday slapped sanctions on US-based Micron Technology Inc (MUO), which was selling its memory chips to key domestic industries .
China’s cyberspace regulator said the biggest US memory chipmaker Micron had failed its network security review and would block major infrastructure operators from buying from the company.
It comes as G7 leaders say they will “de-risk” without “decoupling” China, the world’s second-largest economy, in everything from chips to minerals in response to Beijing’s “economic coercion” will reduce the risk of
Micron’s loss may be their Chinese and South Korean rivals’ gain, however, as mainland Chinese companies look for memory products from other sources.
Chinese stocks moved into Tuesday on the back of a rare solid gain on Monday, although the yuan remains under heavy selling pressure, trading through the 7.00 level per dollar for the third straight day.
All of this could be moot, however, if Democrats and Republicans in Washington reach agreement on the $31.4 trillion debt ceiling impasse. Top congressional Republican Kevin McCarthy said talks are “on the right track” and the deal being worked out may be acceptable to his allies.
But Treasury Secretary Janet Yellen warned again late Monday that it was “highly likely” that the Treasury would run out of cash by June 1, leaving open the possibility of a US default for the first time.
The Treasury said on Monday it had $60 billion left with it as of Friday.
Here are three key developments that could provide more direction to the markets on Tuesday:
– Japan Flash PMI (May)
– Australia Flash PMI (May
– South Korea Consumer Sentiment (May)
by Jamie McGeever;
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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.
Jamie McGeever
Source: www.reuters.com
