💎 Fed’s first rate cut since 2020 set to trigger market. Find undervalued gems with Fair ValueSee Undervalued Stocks

Tracking China's slowdown

Published 09/15/2022, 04:03 PM
Updated 09/15/2022, 04:07 PM
© Reuters. A crane is seen amid residential buildings under construction in Shanghai, China July 20, 2022. REUTERS/Aly Song
BARC
-
SONY
-
LOW
-
USD/CNH
-

(Reuters) - A look at the day ahead in Asian markets from Jamie McGeever

Another day, another surge in U.S. bonds yields, and another sell-off on global markets. On top of that, Asian markets wake up on Friday to a raft of key economic indicators that could confirm the extent of China's slowdown.

The August readings for house prices, urban investment, industrial production, retail sales and unemployment will paint a pretty clear picture of where the Chinese economy is right now. And it is not a pretty picture.

Any hopes for a rebound in the second half of the year have been dashed by renewed COVID-19 lockdowns and the deepening property sector slump. Trade growth has also slowed, while on Thursday the offshore yuan fell to a fresh two-year low through the 7.00/dollar barrier.

As part of a sweeping global downgrade, economists at Barclays (LON:BARC) cut their 2022 Chinese GDP growth forecast to 2.6% from 3.1% - "its lowest annual growth outcome in many decades" - and cut next year's outlook to 4.5% from 5.3%.

Some economists are even expecting sub-2% growth this year.

Following the offshore yuan's fall below 7.00/$, markets will be alert to possible PBOC action to prevent the fall from snowballing. The dollar has jumped 10% in the last five months, and 5% in the last two - huge moves for the tightly managed yuan.

But given the seemingly unstoppable rise in the two-year U.S. bond yield it will be difficult to tame the dollar, something the BOJ will also be acutely aware of as the yen falls back towards 145.00/$.

South Korean unemployment data and RBA governor Phillip Lowe's (NYSE:LOW) parliamentary testimony could also give their respective currencies direction on Friday.

Key developments that should provide more direction to markets on Friday:

South Korea unemployment (August)

RBA governor Philip Lowe speaks

Sony (NYSE:SONY) earnings (Q2)

© Reuters. A crane is seen amid residential buildings under construction in Shanghai, China July 20, 2022. REUTERS/Aly Song

Euro zone inflation (August)

U MIch inflation expectations (September)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.