Asia headed for a big data day with macro drivers

Asia is headed for a big data day with macro drivers, including Japan’s Tankan, China’s HSBC manufacturing PMI and India’s wholesale price inflation.

The BOJ’s Tankan survey started off with high expectations, but the data showed mixed results. The weak yen has benefited large manufacturers when the index rose to 16, but CAPEX was at a disappointing 4.6% from 5.1%, compared to the previous month. The quarterly Tankan report is one of the most influential pieces of data – it measures the confidence readings of large manufacturers.

The futures on the Nikkei pared back after the reading on the CAPEX raised concerns on the economic growth for next year. Consumption is expected to slow down and whether Abenomics will sustain its momentum after a strong start.

China’s HSBC/Markit manufacturing PMI for December should show a positive reading, signalling the momentum of recovery in the Chinese economy and stronger global demand for exports. Officials have maintained their efforts to rein in credit growth and stability in the manufacturing sector has given investors’ confidence. Improvements in PMI in the past have been in larger manufacturers, while smaller companies are struggling. Today’s HSBC survey would show how the smaller companies are managing.

India’s RBI is expected to hike rates by 25bps to counter high inflation. Today’s wholesale price index (WPI) is likely to maintain the levels seen in October of 7%. The consumer price index, last week, jumped to 11.24% for November, from 10.17% in October. This prompted Rajan to say, 'we are very uncomfortable with the current level of inflation'. It also sparked a retreat in the equity markets. Since Rajan took over the helm in September, the RBI has hiked rates by 50bps and the rupee has stabilised from 68.8 to 62. The Indian stock market which has touched a record high on the state election is likely to remain muted ahead of the RBI meeting on Wednesday.

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.