Jamie McGeever, a financial markets columnist, gives a preview of the day’s trading in Asian markets.
After the U.S. Congress reached a last-minute agreement to avert a partial federal government shutdown, there may be an initial surge of optimism or relief that could lift Asian markets on Monday.
However, statistics from the Chinese purchasing managers index released over the weekend that indicated inconsistent levels of manufacturing and services activity in the previous month could put a damper on that. This week will also see the release of further PMI data from the entire area.
After a relatively terrible third quarter, investors will want to start the fourth quarter on a high note. As investors accepted the fact that U.S. interest rates will not decline as swiftly as they had hoped, stocks, bonds, and non-dollar currencies all declined, albeit to varied degrees.
For the majority of the week, China’s markets will be closed due to the Golden Week holiday, and investors will undoubtedly appreciate the break given the faltering economy, implosion real estate market, money leaving Chinese assets, and pressure on the currency.
However, the International Monetary Fund is a little more upbeat, noting last week that Beijing’s recent policy support is having a good impact and stabilising the economy.
After coming in far behind expectations the entire year, the next step is for growth to re-accelerate. Economic surprises are still unfavourable, but they have improved since the summer’s lows, which corresponded historically with the tremendous economic and financial stress of the years 2008, 2015, and 2020.
The most recent snapshots from Australia, Japan, and Indonesia are included in Monday’s batch of PMI surveys, while Japan will also release its much regarded ‘tankan’ survey of business morale and activity.
The first trading week of the fourth quarter begins with a flurry of inflation statistics coming from throughout Asia and the Pacific, as well as market-moving announcements from Australia, India, and New Zealand’s central banks regarding their monetary policies.
The most recent consumer price readings for September from Indonesia, South Korea, the Philippines, Thailand, and Taiwan are included in the inflation data.
Meanwhile, it is anticipated that the Reserve Bank of Australia, Reserve Bank of New Zealand, and Reserve Bank of India will all maintain their benchmark interest rates at 4.10 percent, 5.50 percent, and 6.50 percent, respectively. The advice of policymakers is under close scrutiny.
Investors believe the RBA may have one more increase planned for this year. The question now is how long the ‘higher for longer’ pause lasts and when the relaxing cycles start. However, many other central banks have probably finished their rate-hiking cycles.