1 week Ago
Asian markets are expected to face steep declines on Monday, mirroring Wall Street's Friday slump. According to USA Daily, investors interpreted US jobs data and remarks from Federal Reserve officials as a troubling combination of labor market weakness and limited interest in cutting rates by 50 basis points in the coming week. Japanese futures point to the Nikkei 225 index falling more than 3%, influenced also by the yen's strength, a reflection of growing risk aversion in global markets.
The S&P 500 and the Dow experienced their largest weekly drop since March 2023, while the Nasdaq recorded a 2.6% fall, marking its biggest weekly loss since January 2022. Concerns over the US economic and policy outlook have added to the pressure on Asian markets, which are also digesting key economic indicators from China, Japan, and Taiwan.
Japan is set to release data on bank lending, trade, current account figures, and revised GDP growth, while Taiwan will unveil trade data. Crucially, China is expected to report producer and consumer price inflation data, with potential global impact. Foreign investors are becoming more cautious on Asian stocks.
Data from LSEG showed they were net sellers in August, while JP Morgan recently withdrew its buy recommendation on Chinese stocks. Chinese markets closed at a seven-month low on Friday. On Friday, the S&P 500, Dow, and Nasdaq all posted significant weekly percentage losses following weak US jobs data.
Although signals from the US were mixed, with the unemployment rate ticking lower and wage growth accelerating, markets reacted negatively. Officials, including Fed Governor Christopher Waller and New York Fed President John Williams, reaffirmed their confidence in a "soft landing" but gave no indication of a 50 basis point rate cut. Meanwhile, oil and commodity prices are dropping rapidly, signaling increased investor concerns about the global economy.
Monday's economic calendar in Asia is set to provide further clarity. China's inflation figures are expected to show a slight increase in annual consumer inflation, rising to 0.7% in August from 0.
5% in July. However, factory gate prices are expected to fall 1.4% year-on-year in August, almost double the previous month's 0.
8% decline, indicating ongoing deflationary pressures. Former central bank governor Yi Gang has called for more fiscal stimulus and accommodative monetary policy to address deflation risks. In Japan, second-quarter GDP growth is expected to see a slight upward revision, while Taiwan's export growth is forecast to have more than doubled in August to 7.
35%, driven by its leading chipmaker TSMC, which partners with Nvidia in chip manufacturing..
