February 3, 2023

Pinoy Trekker

Pinoy Trekker – We go anywhere

PMI, PMI Baby By Reuters

©Reuters. FILE PHOTO: Pedestrians are silhouetted as they walk past an electric stock listing board in front of a brokerage office in Tokyo, Japan October 18, 2022 REUTERS/Issei Kato/File Photo

By Jamie McGeever

(Reuters) – A look ahead for the day ahead in Asian markets by Jamie McGeever.

Asian markets are looking to end the week on positives on Friday, with regional stocks on course to post their fourth straight weekly gain.

However, the relative calm may not last if recession risks and fears increase. There’s good reason to believe this is in the cards.

Evidence from the first November Purchasing Managers’ Index (PMI) data released so far shows that private sector activity is weaker than forecast and contracting in many countries, particularly the United States.

In Asia, Japan’s manufacturing activity is shrinking more than it has been in two years, according to flash estimates. Investors will be keeping a close eye on PMI reports for most other Asian countries – including economic heavyweights China, South Korea and India – due December 1st.

Fed officials, meanwhile, left the markets a Thanksgiving bite of their latest policy meeting minutes to chew on. A US recession next year is “almost as likely as the baseline (forecast)”.

Wall Street dismissed this on Wednesday, but cannot do so for long. Certainly.

Right now, however, stock investors’ glass is half full. The MSCI Asia ex-Japan Index is on track for its fourth consecutive weekly gain and is up 14% so far in November. This would be the best month since March 2009 and one of the best on record.

Of course, this comes at the end of a brutal year for world markets, in which Asia has suffered from rising US interest rates and historically weak domestic currencies.

Like equities, regional currency markets are enjoying a period of relative calm as weaker US inflation numbers weighed on the dollar. Some have consolidated more than others: recent intervention has strengthened the yen and the Thai baht has appreciated for six straight weeks.

Investors are hoping for more consolidation and calm on Friday, postponing potential PMI fireworks to next week.

Three key developments that could give markets more direction on Friday:

– Japan Tokyo Inflation (October)

– Inflation in Malaysia (October)

– Industrial production in Singapore (October)