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With the set of central bank meetings over, look ahead to more Trump and macroeconomic indicators in the coming week.
Orders with a protectionist nature were seen dotting the early stages of President Donald Trump’s term and the latest immigration policy tipped the market into risk-off mode. Indeed amongst the gainers, JPY and gold had been chieftains.
On the other hand, global equity markets retreated at the start of the week and Asian markets had only a brief glimmer of hope in the week from China’s official manufacturing PMI data. There remains US January non-farm payrolls (NFP) data due before the end of this week and strong expectations are in store for the data particularly after positive ADP private payrolls earlier.
The US, the stage
As things stand, the US markets continue to serve as a primary driver of sentiment for global equity markets. The past week has shown us not only a period of consolidation for prices, but a market that remains unsure under the clouds of uncertainty. This has been a theme occupying headlines for the past few months and even as we step into February.
Certainly we know that the newly-minted President would like to do a “big number” on the Dodd-Frank and have ordered the halt of Obama’s fiduciary rule in addition to a review of the Dodd-Frank regulations. Furthermore, the President has also shifted the spotlight to the North American Free Trade Agreement, signaling his intention for renegotiations. However details remain to be fleshed out and the President’s interview with Fox News television over the weekend could shed light into some of his approaches. The President will also meet with Japan’s Prime Minister Shinzo Abe at the White House on Friday after accusing the country of currency manipulation this week. The meeting could set the tone for developments of trade relations in the region.
While the world including Asia continue to watch the US’ Q4 earnings performance, the past week had been lackluster at best. At the halfway mark for earning release on the S&P 500, we are seeing approximately 75% of the companies surprising on the upside. The week ahead will be lined with another 86 earnings report on the S&P 500 index and these performances are expected to sway markets amid the political noise.
For Asia, the attention is likely to be centered on the set of Chinese data due on Friday. This week we have seen China’s official manufacturing PMI and private Caixin gauge moving in different directions, though both prints have remained in expansionary territory. The upcoming Friday will see the first set of trade data from China. The market is currently holding strong expectations for exports to revert into year-on-year growth. With the improvements seen in official PMI conditions, we could be staring at another booster for Asian markets. China’s loan conditions would also be reported between 10-15 February.
Notably, the Reserve Bank of India and Bank of Thailand will both be holding their central bank meeting on Wednesday and the Bangko Sentral ng Pilipinas follows on Thursday. Other data due from Asia in the week ahead includes Indonesia’s Q4 GDP (Monday) and several trade updates.