The Morning Show: Major macro signals from China and Japan

May 15 (Reuters) – A look at the day ahead in Asian markets from Jamie McGeever.

Key economic data from China and Japan, and the central bank’s interest rate decision from the Philippines could be the main regional drivers for Asian markets this week, as investors grow increasingly concerned about the macroeconomic outlook in the US and globally.

Global equities ended last week on shaky footing as concerns about the US debt ceiling, credit conditions and the cumulative effect of a 500 basis point Fed rate hike on surprisingly strong US earnings were outweighed.

These were some of the issues discussed at the three-day meeting of G7 finance leaders that concluded on Saturday.

The MSCI World Index fell 0.5% – perhaps not a big deal, but the second straight weekly decline and the steepest since the US banking crisis erupted two months ago.

However, Asian stocks rose excluding Japan, for a second straight weekly rise, also something not seen since early March.

If US tech stocks are flying — the Nasdaq is up for a third week, and Wall Street’s rally this year has been thanks to AI-centric stocks, according to SocGen — Asian tech is stuck in quicksand.

The Hang Seng Tech Index fell last week for the sixth week in a row, its longest losing streak since mid-2015 when the first tremor of the Chinese stock market was felt and just weeks before Beijing devalued the yuan.

The latest Chinese economic indicators have been shocking. Inflation and imports collapsed in April, casting serious doubt on the strength of the economy’s post-lockdown recovery and boosting expectations of further policy easing.

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Industrial production, retail sales and fixed asset investment data for April this week will paint a fuller picture. More below par figures are likely to add selling pressure to Chinese stocks – the Shanghai Composite had its worst week since March, while the blue-chip index fell for a fifth week and also saw its biggest weekly drop in two months.

Japan’s first-quarter GDP numbers will be released on Wednesday, and perhaps more importantly, the latest inflation numbers will be released on Friday.

Core inflation is much higher than the BoJ would like and is expected to re-accelerate to 3.4% in April. Despite New Bank of Japan Governor Kazuo Ueda’s insistence that it will slow down in reversing the bank’s ultra-loose policy, some analysts expect the BoJ to relinquish yield curve control this summer.

Investors exposed to Thailand are waiting to see how the election results can shift the balance of power. First-quarter GDP figures will be released on Monday, the same day the Philippine central bank is expected to keep interest rates on hold at 6.25%.

Here are three key developments that could provide more direction to the markets on Monday:

– Thai GDP (1st quarter)

– India’s producer price index inflation (April)

– Japanese corporate commodity price inflation (April)

By Jamie McGeever; Editing by Lisa Shumaker

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The opinions expressed are those of the author. They do not reflect the opinions of Reuters News, which is bound by the trust principles of integrity, independence, and freedom from bias.

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