Asia Weekly: What Asia investors need to know for the week ahead (Sep 30-Oct 4)

Market Analysis /
30 Sep 2019

This week's data calendar is jam-packed with goodies that will shape investors' views ahead of the October 30 FOMC meeting—notably, the granddaddy of economic releases: Friday's employment report.

According to the latest market survey by leading business publications, headline nonfarm payrolls are focused at +125k vs 130k previously but could be boosted by Census workers, which is why it's essential to concentrate on private payroll numbers (+100k vs +96k).

1-year historical NFP graph via Trading Economics

There are two critical forward-looking sentiment gauges released this week (Chicago PMI and Manufacturing ISM) which might be the most reliable economic indicators for assessing the state of the US economy in this trade war environment.

Most analysts expect the Chicago PMI to remain depressed. Moreover, economists expect Tuesday’s US manufacturing ISM to edge up a touch to 50.8 vs 49 previous. While some investors may take solace in the improving ISM data, the decidedly disappointing PMI figures out of Europe last week, and the wobbly PPI and IP data from China on Friday, leave Fed officials little reason to be optimistic concerning the global manufacturing outlook.

1-year historical Chicago PMI graph via Trading Economics

Historical Trend for ISM data

 

Source: Bloomberg

Also critical for shaping investors views on FOMC policy, expect a deluge of “Fed speak” to digest this week. The US markets are at a crictical policy juncture and this week could provide a good look into policymakers’ thoughts as to which way they may lean concerning further policy easing.

AxiTrader Economic Calendar

 

 

Key dates and events on the ASEAN Docket

Chart of the Week ahead 

Asia’s key bellwether USDCNH took a bit of a hiccup to end the week after reports hit that the White House is contemplating putting limits on US portfolio flows to China, causing the USDCNH to spike on Friday. We’ll be closely following this headline early in the week.

Source: AxiTrader

 

The Reserve Bank of India rate decision

The release will garner a fair bit of attention in the wake of the corporate tax cut, which provided local equity markets with a positive surprise. However, the weaker growth data prints do point towards further easing by the Reserve Bank of India (RBI). Economists widely expect a 25-basis point cut on October 4, down from the 35-40bps anticipated earlier by the market as analysts now expect a more moderate easing in the wake of the surprise tax cut.

India’s investors have continued to bask in the afterglow of the surprise corporate tax cut.

Source: AxiTrader

Regional inflation gauges

CPI inflation data due out next week are unlikely to change the expectation of rate cuts by the region's central banks who universally maintain an easing bias given the global economic slowdown, the slump in regional exports and as more clouds gather over China's economy.

Economists expect Taiwan's CPI inflation is likely to rise to 0.7% in September from 0.4%, while analysts expect Indonesia and Thailand's inflation gauge to grow by only 0.1 % to 0.6% and 3.6%, respectively, from 0.5% and 3.5% in the same period. The Philippines is likely to report a notably weaker CPI inflation of 1.2% in September vs 1.7% in August, mainly due to a supply-driven fall in rice prices.

 

Key regional trade data

Given the market’s initial apocalyptic read on Korea’s exports during the first 20 days of September – typically a key bellwether for regional, if not a global, sentiment – the data was miserably skewed by the traditional Chuseok holiday as the number of working days declined by two days in the cited period compared with a year ago. On October 1, the markets will get a better read of the monthly export data due to be released. Nonetheless, most analysts expect exports to remain depressed as uncertainties about the timing of an anticipated breakthrough in the U.S.-China stand-off and a recovery in the semiconductor sector continued to be risks to the domestic economy

Malaysia's exports continued to defy global trends in recent months, but all good things must surely come to an end as the worldwide slump in demand for electrical products may finally "catch down" on Malaysia's export sector. Economists expect a slowing to .3% in August from 1.7 % in July.

 

Hong Kong retail sales and the damage done.

Hong Kong's retail sales growth (in volume) is expected to worsen, to -16% in August from -13% in July, amid depressed sentiment and protests.

 

Expanded ASEAN Calendar

 

Read more market views from Team AxiTrader: https://www.axitrader.com/int/market-news-blog/.

The information is not to be construed as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product, or instrument; or to participate in any trading strategy. Readers should seek their own advice. Reproduction or redistribution of this information is not permitted.

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