© Reuters. FILE PHOTO: A man uses a laptop, under an electronic board showing stock visualizations, inside a brokerage building, in Tokyo, Japan, March 20, 2023. REUTERS/Androniki Christodoulou
By Jamie McGeever
(Reuters) – A look at the day ahead in Asian markets from Jamie McGeever.
Japan’s first quarter GDP figures are the highlight for Asian markets on Wednesday, with the world’s third-largest economy expected to have grown at its fastest pace in three quarters thanks to strong services sector spending.
A Reuters poll of economists estimates annualized GDP growth of 0.7% in the first three months of 2023, rising sharply from just 0.1% October-December and the fastest since the 4.7% of April-June 2022.
Markets would be forgiven for going into the release with a ‘glass half-empty’ attitude. Japan’s economic data have undershot forecasts recently – Citi’s Japanese economic surprises index is now negative and the lowest in four months.
If indicators from Japan have been underwhelming, they’ve been alarming from China, the world’s second-largest economy.
Another batch of Chinese economic data fell short of expectations on Tuesday, slamming Chinese financial assets and cementing the view that Beijing will have to inject fiscal or policy stimulus into the sputtering economy. Or both.
Industrial output and retail sales growth in April undershot forecasts while property investment fell again, fueling concerns about its outlook as both its domestic and export engines of growth remain underpowered.
The slipped to its weakest level this year, nudging 6.98 per dollar and Chinese stocks resumed their recent losing streak, reducing the Shanghai composite’s year-to-date gains to 6.5% and the blue chip index’s YTD gains to 2.75%.
April house prices are out on Wednesday.
Tech giant Tencent reports Q1 earnings on Wednesday, following Baidu (NASDAQ:)’s profit- and revenue-beating Q1 results on Tuesday. Perhaps another bright spot on the corporate front will pierce the economic gloom.
Meanwhile, Hong Kong’s stock exchange on Monday launched a new Connect scheme linking the financial hub with the mainland, offering offshore investors access to interest rate derivatives to help hedge their Chinese bond exposure. It will also help promote the yuan currency’s global status.
The move comes after a sustained period of foreign investors dumping Chinese bonds. Since Russia invaded Ukraine in February last year demand for Chinese debt has evaporated, casting extra doubt over the yuan’s ability to gain reserve currency status.
Asian markets on Wednesday won’t be getting any boost from Wall Street after the three main indices closed in the red on Tuesday. The Dow and are down for the year too.
U.S. debt ceiling talks loom large over markets. They hit another brick wall on Tuesday although there are signs that progress is being made and default can be averted.
U.S. President Joe Biden will return to Washington on Sunday immediately after the G7 summit to focus on debt ceiling talks, skipping planned visits to Australia and Papua New Guinea.
Here are three key developments that could provide more direction to markets on Wednesday:
– Japan GDP (Q1)
– China house prices (April)
– Australia wage growth (Q1)
(By Jamie McGeever)
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In recent months, investors have been closely monitoring two of the most important economies in the world, Japan and China. Japan has seen its economy grow steadily over the past few months, while China has seen signs of slowing growth. This has created some uncertainty for investors and has led many to keep a close eye on these two important economies.
Recently, the Tokyo-based research firm Marketmind released its latest report examining the state of these two economies. The report showed that Japan’s economy has continued to grow in recent months, though the pace of growth has slowed somewhat in the past few weeks. The report attributed this slowing growth to a combination of factors, including weak business investment, a decline in exports, and a decrease in consumer spending.
Meanwhile, the same report pointed to signs of a slowdown in China’s economy. Marketmind found that the country’s growth rate has slowed for the third consecutives month, and it is now at its lowest point since 2009. This weakness is mainly due to the trade tensions between the US and China, as well as the slowdown in China’s manufacturing sector.
The report also noted that the Chinese government is taking steps to reverse the economic slowdown, but it’s unclear if these measures will be effective in the short term. Nonetheless, the Marketmind report concluded that while Japan’s economy is still growing, China is likely to remain weak in the near future.
Overall, the Marketmind report provides a clear picture of the state of two of the world’s most important economies and is likely to be of great interest to investors. It shows that Japan is still showing signs of growth, while China appears to be in the midst of an economic slowdown. As such, those invested in Japan or China should keep a close eye on their respective economies in the near future.
