After U.S. inflation statistics on Tuesday appeared to be cooling off and paving the way for the much-heralded economic “soft landing,” Asian markets opened on Wednesday with equities, risk assets, and investor mood surging globally. The two- and five-year bond yields fell more than 20 basis points on Tuesday, the Nasdaq surged more than 2%, the Russell 2000 index rose 5% for the best day in a year, the dollar fell 1.5% for the worst day in a year, and the Australian and New Zealand dollars both increased 2%. These were just a few of the stunning moves made by the U.S. markets.
Even though there is a lot of event risk, this should be explosive news for Asia on Wednesday. The third quarter GDP of Japan, as well as October’s retail sales, industrial output, investment, and unemployment numbers, are among the high-profile data releases. Meanwhile, Chinese and American presidents Xi Jinping and Joe Biden are meeting in San Francisco for the Asia Pacific Economic Cooperation summit.
Xi and Biden have only before met, and this is Xi’s first trip to the United States since 2017. Xi is trying to convince Biden to loosen export restrictions and taxes that prevent the shipment of the most cutting-edge chips to China.
In addition, he will be trying to increase the declining investment by American companies in China during a separate luncheon with business executives. As China’s economy has failed and tensions with the West have increased, foreign investors have withdrew enormous sums from the country this year.
China’s yuan rose to a three-month high of 7.25 per dollar on Tuesday, ahead of their meetings. This was a rise of almost 0.5% and the currency’s largest one-day increase in the previous two months.
If China’s economy is continuing to retain the unexpectedly strong pace it shown in the third quarter, it will be clear from the most recent retail sales, industrial output, investment, and unemployment numbers for October.
For over a month, Citi’s China economic surprises index has been in positive territory, indicating that either activity is increasing or analysts’ expectations are being lowered. or somewhat both.
Conversely, Japan’s economic surprises index just entered negative territory, reaching its lowest level since June. The threshold might seem low enough after the initial reading of the third quarter GDP on Wednesday, which may raise it once further.
According to economists, the economy declined 0.6% annually and by 0.1% from the April–June quarter. Compared to growth rates of 1.2% and 4.8%, respectively, in the preceding quarter, it would indicate a notable decline.
On Wednesday, JD.Com and Tencent Holdings’ third-quarter results announcements will be the main corporate focus in Asia. It is anticipated that JD.Com would post profits per share of CNY5.77 and sales of CNY249.258 billion, up 2.3%.