Morning Bid: Asia's Economic Spotlight Shines On Giants China And Japan

A man wearing a protective mask, amid the outbreak of the coronavirus disease (COVID-19), walks past an electronic board displaying stock market data outside a brokerage in Tokyo, Japan, February 25 of 2022. REUTERS/Kim Kyung-Hoon/File Photo

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Aug 15 (Reuters) – A look at the day ahead in Asian markets by Jamie McGeever

Economic data from Asia’s two economic powerhouses kicks off the global trade day on Monday: a batch of July indicators from failed China and Japan’s second-quarter GDP report.

We have the first look at how the COVID-19-hit Chinese economy started the third quarter, with July readings for industrial production, retail sales, house prices and urban investment. In general, economists are looking for a recovery, albeit a gradual one.

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Chinese stocks snapped a five-week losing streak on Friday to end the week up 0.8% (.CSI300), boosted by the feel-good factor on Wall Street and an easing of Sino-U.S. tensions over Taiwan.

Also on Friday, however, five U.S.-listed Chinese state-owned companies whose audits are under scrutiny by the U.S. securities regulator said they would voluntarily delist from the New York Stock Exchange. Read more

Meanwhile, Japan’s economy is expected to have rebounded strongly in the second quarter after contracting in the first, with economists forecasting quarterly growth of 0.6% and an annualized expansion of 2.5%.

The Japanese yen rose about 1% against the dollar last week, its third weekly gain in four. Could it convincingly break the 130 per dollar barrier this week?

The tone across Asia on Monday will also be set by growing hopes that US inflation has peaked. This could further fuel the rally in risk assets, tighten the US yield curve and weigh on the dollar.

Later on Monday, the US Treasury releases its “ICT” data for June, which measure the inflows and outflows of US sovereign debt. In light of recent political tensions, China’s demand will be closely watched.

Key developments that should give markets further direction on Monday:

Japan’s second quarter GDP estimate

China Industrial Production, Retail Sales, House Prices, Urban Investment Data (July)

New York Fed Manufacturing Index (August)

The Fed’s Christopher Waller talks banking and finance