Asian markets eye a choppy week ahead

Asian markets eye a choppy week ahead

Jamie McGeever takes a look at the day ahead in Asian markets.

Asian markets are looking to round off the week on a positive note on Friday, with regional stocks on course to chalk up their fourth straight week-on-week rise.

If the recession risks and fears increase, the relative calm may not last. Indications from the initial batch of November purchasing managers index PMI data released so far show that private sector business activity is weaker than forecast and in many countries is contracting, most notably in the United States.

In Asia, Japan's manufacturing activity is slowing down at its fastest pace in two years, flash estimates showed. Investors will be paying close attention to the PMI reports for most other Asian countries - including China, South Korea and India - due to be released on December 1.

Fed officials left markets with a Thanksgiving morsel to chew over from their latest policy meeting minutes. They wrote that a U.S. recession next year is almost as likely as the baseline forecast by Wall Street on Wednesday, but it can't do so for long. Equity investors' glass is half full. The MSCI Asia ex-Japan Index is on course to make its fourth consecutive weekly rise, and it is up 14% in November. This would be its best month since March 2009, and one of its best on record.

This comes at the tail end of a brutal year for the world markets in which Asia has suffered from soaring U.S. interest rates and historically weak domestic currencies.

Regional FX markets are enjoying a period of relative calm as the U.S. inflation readings have weighed on the dollar. Recent intervention has boosted the yen, and the Thai baht has appreciated six weeks in a row.

There will be more consolidation and calm on Friday, leaving the potential PMI fireworks for next week.

Three key developments that could give more direction to markets on Friday are: