Asia week ahead: A lighter week for markets

A light week is expected ahead for markets after the jam-packed start to November. 

Asia Charts
Source: Bloomberg

For Asian equity markets, the set of Chinese data will likely be the key focus alongside President Trump’s first official visit to the region.

Market recap

Mixed returns were seen cutting across equity bourses into the end of the week with the key focus on the naming of the next Fed chair and the tax plan reveal garnering little market reaction. For the markets, the nomination of the relatively dovish Fed governor Jerome Powell had arguably been an expected choice and any decline in the USD index had been drowned down by the GBP/USD drop from Bank of England’s dovish guidance. The end of the week has its eyes set on the labour market update in the US, one that may still hold surprises for the market.

President Trump in Asia

A sparse economic calendar is seen ahead for the US market with Tuesday’s JOLTs job openings and Friday’s University of Michigan consumer sentiment index likely to be the most watched ones. A moderation to the latter had been pencilled in by the market though it is still expected at the 100 mark. Investors will likely be watching this number for any changes to consumers’ perception on the US economic outlook.

Perhaps of more relevance to Asian markets and risk sentiment would be President Donald Trump’s first official visit to the region. The President is expected to make several stops including Japan, South Korea and China. While the strengthening of business and diplomatic ties has been expected, the impact on equity markets remains one to be seen. North Korea may also be a topic that could put those trading haven assets on alert, though the recent bout of provocations from both North Korea and US ends had garnered little long-term reactions.

Asian indicators

While the US earnings season enters a slower patch with only one-tenth of the companies on the S&P 500 index due, earnings reports in the Asian region is expected to stream in. Markets in Japan, Hong Kong and Singapore are expected to see an extensive list of companies issuing their earnings reports. For the local Straits Times Index, Singapore’s largest bank, DBS Group Holdings Ltd., and several developers such as City Developments Ltd. and UOL Group Ltd., will be the ones to follow after the surge in prices of late.

The key economic data in the region next week likely be the set from China. Following the moderation in China’s official manufacturing PMI, underpinned by environmental regulatory changes surrounding the 19th National Party Congress, the market will examine the impact it has on October trade and PPI figures, due Wednesday and Thursday respectively.

Additionally, Q3 GDP from around the region, including Indonesia and Hong Kong will also be reported next week. No changes to monetary policy have been expected from the handful of central bank meetings in Australia, Malaysia and the Philippines. For the local Singapore market, retail sales performance dating back to September remains the sole tier-2 release.

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