The overhanging atmosphere of worry has been driven largely by concerns over Europe’s economic growth, the impending end to QE3, and the outlook for emerging markets being trimmed.
On these considerations, the US Federal Reserve has sounded an alert that it may delay interest rate hikes if foreign growth is weaker than expected.
Asian investors starting the week are likely to take a wait-and-see approach for the first few macroeconomic indicators to set the tone for the markets.
One of the key data points first of the block will be China’s trade balance figures. The consensus forecast for September exports is for an increase from 9.4% to 12%, and for imports to shrink at a slower pace from -2.4% to -2%. Any disappointing figures will likely fuel the pessimistic mood in the markets and weigh down sentiment further.
Looking at things through a more positive perspective, China agrees with the International Monetary Fund’s view that a slowdown in its economy is a healthy correction for sustainable long-term growth. That may persuade some long-term investors to see this as an opportunity to keep a watch out for oversold stocks.
Another lift to the markets could come with the improving situation from the Occupy Central movement, where pro-democracy protests are showing signs of petering out. Police have been clearing barricades of the streets without much incident.
Ahead of the Hong Kong open
With a lack of significant market catalysts, we are calling for the Hang Seng Index, or Hong Kong HS50, to open 1.29% lower at 22,766 points. This will pull it under the key support level of 23,000 points and suggests a further downside momentum ahead as it looks for a new support.