25 Nov (Reuters) – A look at Asian markets ahead by Jamie McGiver.
Asian markets are looking to end the week on a positive note on Friday, with regional stocks posting their fourth straight weekly gains.
However, if recession risks and fears intensify, relative peace may not be sustainable. There are good reasons to believe it’s in the cards.
Signs from the first batch of November’s Purchasing Managers’ Index (PMIs) released so far suggest that private sector business activity is weaker than expected and contracting in many countries, especially the United States.
Flash estimates show Japanese manufacturing activity in Asia is contracting at its fastest pace in two years. Investors will keep a close eye on the PMI reports for most other Asian countries, including economic giants China, South Korea and India, due December 1.
Meanwhile, Fed officials took off to thank the markets for chewing through the minutes of their latest policy meeting. A US recession next year, he wrote, is “almost baseline (prediction) likely”.
Wall Street turned it down on Wednesday, but it may not be for long. Naturally.
For now, the glass of equity investors is half full. The MSCI Asia ex-Japan index is on track to post its fourth consecutive weekly gain, rising 14% so far in November. It would be the best month since March 2009 and the best month ever.
Certainly, it comes at the end of a brutal year for global markets, in which Asia suffered from sky-high US interest rates and historically weak domestic currencies.
Like equities, regional currency markets are experiencing a relatively quiet period as weak US inflation data weighs on the dollar. Some have consolidated more than others: recent interventions have boosted the yen and the Thai baht has appreciated for six consecutive weeks.
Investors expect more consolidation and calm on Friday, which could lead to potential PMI fireworks for next week.
Three key developments that could give markets more direction on Friday:
– Inflation Japan Tokyo (October)
– Inflation Malaysia (Oct)
– Singapore Industrial Production (Oct)
Reporting by Jamie McGeever in Orlando, Florida; Edited by Josie Cao
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