Your Sunday Asia Briefing: A Message From the Factory Floor
Prepare for another tough week in the markets
(Bloomberg) — After a bleak weekend of disasters in Asia, next week will bring more market nerves as a flurry of central bank decisions and economic data set out the path for global inflation and growth. Here are some of the signs to read:
The big production: How are things going in the workshop? Three clues this week will help gauge how Asia’s manufacturing powerhouses are doing, with industrial production numbers from Japan and South Korea and the purchasing managers’ index from China — a measure of whether factory owners think things are getting better or worse. We’ll also get consumer price data from four of Southeast Asia’s biggest economies for an indication of how hard inflation is hitting the region’s developing nations.
The big hawk: Federal Reserve officials are expected to sanction a fourth straight 75 basis-point raise at their Nov. 1-2 policy meeting as they keep pressure on rates to slow inflation. India’s central bank rates team has scheduled an extraordinary meeting the following day, fueling speculation that the domino effect of other nations following the US is likely to continue. The Bank of England will certainly be among those, expected to deliver its biggest rate rise in 33 years. Even Australia’s central bank, a bastion of moderation so far, could feel the pressure at its decision on Tuesday.
The big payroll: Part of the reason the Fed and others keep raising borrowing costs is because unemployment remains stubbornly low in many places, which fuels wage rises and hence consumer spending. Friday’s US jobs data will therefore be pored over by economists for signs that the strong labor market is cracking.
The big earnings: Asia’s earnings spotlight shifts to Japan, with Toyota, Sony and Nomura scheduled to report quarterly results. With the Bank of Japan’s ultra-easy monetary policy still pressuring the yen, investors will be on high alert for any adjustments to Japanese companies’ forecasts. With last week’s selloff of Chinese stocks still on traders’ minds, and the Fed looming, the market could react strongly to any earnings disappointment.
The big queue: President Xi Jinping will host a flurry of top foreign leaders this week as he starts his third term as China’s leader, with Vietnam’s Communist Party chief Nguyen Phu Trong first in line. Pakistan Prime Minister Shehbaz Sharif, German Chancellor Olaf Scholz, and Tanzanian President Samia Suluhu Hassan are also in line before Xi heads to Indonesia and Thailand for major world summits in November attended by global leaders including President Joe Biden and Russia’s Vladimir Putin. Xi didn’t leave China for nearly 1,000 days after imposing the nation’s first Covid lockdown in January 2020.
The big vote: Brazil’s 156 million voters head back to the polling booths today for the runoff between incumbent Jair Bolsonaro and former president Luiz Inacio Lula da Silva in an election that could have resounding repercussions for everything from the global commodities trade to the fate of the Amazon rainforest.
The big take: this week we examined why the world’s biggest source of clean energy is under threat, and the battle between Netflix and HBO. And if you enjoy reading our Big Takes, listen to the new Big Take podcast, which provides more insight into one important story every weekday. Subscribe on Apple Podcasts, iHeart or Spotify.
And finally, as South Korea begins a period of mourning to recover from the devastating shock of Saturday’s deadly stampede during a Halloween party, what are the lessons that can be learned, and what will be the political fallout for President Yoon Suk Yeol?
Please stay safe.
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