The recent Purchasing Managers’ Index (PMI) data in Asia has shown a mixed performance. India’s manufacturing sector is experiencing robust growth, reaching its fastest pace in two and a half years. However, South Korea’s manufacturing sector is currently facing its longest period of contraction in 14 years.
Market sentiment in Asia on Monday might receive a boost from indications of a potential improvement in U.S.-China relations. A senior U.S. State Department official arrived in Beijing on Sunday, with scheduled meetings planned for the week.
Conversely, oil prices could witness a surge due to reports that OPEC+ is considering production cuts to address declining prices and an impending supply surplus.
Looking ahead, Asian investors will have a plethora of economic events and monetary policy decisions to monitor throughout the week.
Inflation data from Indonesia, the Philippines, Thailand, Taiwan, and China will be released, starting with Indonesia on Monday. According to economists surveyed by Reuters, it is anticipated that Indonesia’s annual CPI inflation in May eased to a one-year low of 4.22% from April’s 4.33%.
Revised Japanese GDP figures will be published on Thursday, while China’s comprehensive data release for the week encompasses consumer and producer price inflation, trade figures, foreign exchange reserves, and total social financing (TSF), a broad measure of credit and liquidity in the economy. These reports will provide valuable insights into how the world’s second-largest economy is recovering from the impact of the pandemic. Thus far, Chinese economic indicators have fallen significantly short of expectations, resulting in considerable pressure on Chinese assets.
On Tuesday, the Reserve Bank of Australia is expected to maintain its cash rate at 3.85%, and on Thursday, the Reserve Bank of India is also anticipated to keep its repo rate unchanged at 6.50%, as per Reuters polls.
The following three key developments on Monday could offer further guidance to the markets:
- PMIs from China, Japan, India, and Australia
- Indonesia’s CPI inflation for May
- Retail sales data from Singapore for April
Original article by Jamie McGeever