That’s a mixed bag for Asian assets. Higher U.S. yields and a buoyant dollar will likely weigh on Asian and emerging sentiment, but this is countered by the growing likelihood U.S. interest rates will be cut earlier and further than expected.
Wall Street’s big three indices closed between 0.3% and 0.5% higher on Monday, and U.S. stock futures are pointing to a similar-sized rise at the open on Tuesday.
Japan’s markets reopen on Tuesday after Monday’s holiday, with the yen’s direction likely to set the tone for the day across all assets following last week’s apparent yen-buying intervention.
The dark cloud over Asian markets, however, refuses to lift, and if anything it is getting darker: China.
The batch of top-tier economic data from Beijing on Monday was hugely underwhelming, especially second quarter GDP growth of only 4.7%, which was well below expectations of 5.1% and Beijing’s broader goal of around 5%.
The need for greater fiscal or monetary support – or both – is intensifying, and investors will be hoping for positive signals from the ruling Communist Party’s third plenum, which opened on Monday.
This is the major closed-door meeting held roughly once every five years to map out the general direction of the country’s long-term social and economic policies.
