Asia market week ahead – US NFP, China CNPC

Geopolitical risks became the highlight in a busy week following an assortment of updates. While economic data had not been a prominent driver for markets this week, watch the slew of release in the coming week for leads.

Source: Bloomberg

US-China trade issue still trumps

Global equity markets saw the ups and downs in the week from affirmations of the tariffs deadline extension, Fed Powell dovishness to the eventual heightening of geopolitical risks over both the Trump-Kim summit stalemate and the India-Pakistan border clash. The net movements for equity markets had, however, been broadly muted amid the lack of fresh impetus. While the momentum had slowed across indices in the US to Asia, prices had yet to tip over from the rally since the start of the year.

Boiling down to the basics, the US-China resolution that holds the key for the market outlook remains a question mark with expectations building for the signing of a deal between US and China as early as mid-March. Following the spectacle in the Vietnam summit this week with the mercurial President Trump, it is evident that event risks remain as we await the announcement for a potential Trump-Xi summit in the coming week.

US labour market update

The set of data release this week had largely been mixed with China’s February PMIs remaining in contraction territory while the delayed US Q4 GDP had surprised on the upside. Still, Chinese New Year effects and the backward-looking data had invited markets to take the numbers with a pinch of salt.

Moving into the new week, however, the US market likely find interests with the February labour market update among others. Payrolls are expected at a healthy 170k while unemployment had been pencilled in to dip to 3.8% for February. Alongside the expectation for average hourly earnings to accelerate to 0.3% month-on-month, this could keep the upward pressure going for the US dollar index. That being said, look also to the slew of Fed speakers in the week including Fed Chair Jerome Powell and New York Fed President John Williams on Friday and Wednesday respectively for insights prior to the March 19-20 Federal Open Market Committee (FOMC) meeting.

Notably, there would also be a significant number of central bank meetings including the Reserve Bank of Australia (RBA) and the European Central Bank (ECB) on Thursday, though no changes are expected in monetary policy from either. ECB President Mario Draghi to be heard on the wires post-meeting, scrutinized alongside RBA governor Philip Lowe on Wednesday for any signs of dovish intonations.

China CNPC begins

Asia markets continue to find a slew of Chinese data out in the week ahead, though running alongside this would be the commencement of China’s National People’s Congress. It may not be until later that we hear updates on items such as growth and intellectual property laws but will be one watched across the market. Meanwhile, China’s Caixin services PMI will be released on Tuesday before the trade numbers on Friday. Following the slide for the official manufacturing PMI to a 3-year low, exports are seen to falter into February, perhaps another reminder to watch for China economic weakness.


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