Awaiting Chinese numbers

A soft start for Asia markets is eyed going into the fresh week with caution setting in ahead of the barrage of Chinese data this Monday.

China’s data dump

While Wall Street had closed out last week in gains, lifted by the Fed cut optimism, Asia markets are not looking to inherit this glow going into the start of the new week. China’s Q2 GDP, alongside June’s retail sales, industrial production and urban fixed asset investments will be items due 10am local time and the market is not expecting all rosy numbers as detailed in our Asia week ahead piece. Given the escalation of trade tensions and the implementation of tariffs, China’s GDP is due to show signs of slowing, one to watch. Meanwhile the high frequency industrial production figure could improve from the disappointment of 5.0% in June, though retail sales and urban fixed asset investments look set to soften. In turn, a sense of cautiousness can be seen setting in at the start of the fresh week, weighing on Asia going into the open.

Data divergence

Notably, the continued slowdown in China’s June trade and inflation numbers coupled with the significant miss of Singapore’s Q2 GDP last Friday had been evidences of the economic deceleration manifesting in the figures. This had been more apparent in Asia than perhaps the US in the past weeks with the latter seeing surprises in both jobs and inflation numbers. While Fed support have been a key driver, the divergence (in purple below) seen between the likes of the comprehensive S&P 500 index in the US and the MSCI Asia ex-Japan index had also continued to accelerate into last week.

Expectations are for the string of Asia indicators to continue reflecting the weakness that could weigh on the market, though any policy support would be watched particularly from the likes of China amid the impetus derived from these readings. As for the US market, it will be one watching earnings this week with Citigroup kickstarting the season. A negative one expected from us could finally bring some gravity to prices that had been decidedly defying it.

Source: Refinitiv

On FX, it does appear that the likes of the US Dollar Basket had been shifting towards a flat pattern following the departure from the uptrend. As told above, data surprises had been noted in the past weeks to support the greenback. On the other hand, against the conviction of Fed support which weighs on the USD, a state of consolidation could set in for the near-term. Look to the string of data in the week for guidance alongside a couple of Fed talks prior to the pre-FOMC blackout period.

Source: IG Charts

Friday: S&P 500 +0.46%; DJIA +0.90%; DAX -0.07%; FTSE -0.05%

IGA, may distribute information/research produced by its respective foreign affiliates 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.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. 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, and 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.

Please see important Research Disclaimer.

Take a position on indices

Deal on the world’s major stock indices today.

  • Trade the lowest Wall Street spreads on the market
  • 1-point spread on the FTSE 100 and Germany 40
  • The only provider to offer 24-hour pricing

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
liveprices.javascriptrequired
liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

liveprices.javascriptrequired

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.