By Jamie McGeever
(Reuters) – A preview of the day ahead in Asian markets.
Asian markets are set for a positive start to the new quarter after further evidence of a “soft landing” in the United States on Friday and figures on Sunday showing that manufacturing and services sector activity in China last month accelerated in tandem.
Trading volume on Monday will be lighter than usual, with much of Europe still closed for the Easter holiday, but U.S. stock and bond markets are open again.
Asia’s economic calendar is full of key indicators: manufacturing purchasing managers’ index reports from several countries, including Japan; South Korean trade; Indonesian inflation; and the quarterly tankan surveys on business conditions in Japan.
The exchange rates of Asia’s two largest economies will once again be in the spotlight: the Japanese yen remains in “intervention” territory, and although it is also under pressure against the dollar, it is located at its highest level in 30 years against the yen.
The yuan fell last week in spot trading to its lowest level this year, around 7.22 per dollar, but the People’s Bank of China kept the daily fixing rate virtually unchanged around 7.0950. over the last four days.
This suggests that the PBOC does not want volatility or sudden weakness. But Beijing’s predicament is exacerbated by the yuan’s exchange rate against the yen: it is at a 30-year high against the Japanese currency, giving Tokyo a competitive advantage on the global trade stage. .
But Beijing will have welcomed the latest results from technology giant Huawei and official PMI figures which show that manufacturing activity is increasing for the first time in six months.
The manufacturing PMI rose to 50.8 from 49.1 a month earlier and export orders also recovered. The official services PMI rose to its highest level since June and the composite PMI to its highest since April – figures that could provide a boost to Chinese and global markets on Monday.
Unofficial China Caixin Manufacturing PMI figures will be released on Monday.
Investors will also be looking to see whether tankan surveys of Japan’s first quarter economic conditions show evidence of economic momentum and a recovery in domestic demand. Large companies’ investment plans could also indicate whether Japan’s stock boom has more upside.
Another determining factor for the market on Monday could be Indonesian consumer inflation. Rising meat and food prices are expected to push the annual rate from 2.75% to 2.91% in March, which would be the highest since August, although still within the 1.5% range. at 3.5% set by Bank Indonesia.
The central bank left its benchmark rate unchanged at 6% for the fourth consecutive meeting in February and will likely wait for the Fed to lower rates before easing rates.
Regional highlights then include more PMIs, inflation in South Korea and the Philippines, and the latest monetary policy decisions and guidance from the Reserve Bank of India.
Here are the key developments that could provide better direction for markets on Monday:
– Caixin Chinese manufacturing PMI index (March)
– Tankan survey in Japan (T1)
– Inflation Indonesia (March)
(By Jamie McGeever; editing by Lisa Shumaker)