Asian markets await economic data from Tuesday

Asian markets await economic data from Tuesday

Market sentiment seems to brighten as it goes into the last trading day of the month as investors wait for a torrent of Asian economic data on Tuesday, including Indian GDP.

As the U.S. bond yields dipped and there was a rare pause in the cranking up of Fed rate expectations, the equities were relatively calm on Monday, as Europe's Stoxx 600 had its best day in more than three weeks, the S&P 500 and Nasdaq both rose modestly and the VIX 'fear index fell back to a 20 handle.

The Asian markets held up better on Monday after Wall Street slumped on Friday and the heightened U.S.-China tensions over the weekend. The yuan even scored its biggest rise against the dollar in a month.

If the Asian markets are going to be affected by the end of month profit-taking and position-squaring, there may be scope for a bounce.

The MSCI Asia ex-Japan index is down nearly 7 per cent in February - compare that to the MSCI World index, down almost 3 per cent, and the S&P 500, down about 2 per cent.

The slew of economic indicators across the region due for release on Tuesday is topped by Q 4 Indian GDP. Economists think growth slowed further due to weak demand and is going to lose momentum going into this year as higher interest rates weigh on activity.

The consensus forecast is for annual growth of 4.6 per cent to slow to 4.4 per cent in Q1 this year. Growth over 2023-24 is expected to be 6.0 per cent, lower than the government's 6.5 per cent goal.

The latest snapshots of industrial production and retail sales from Japan, credit and lending figures from Australia and trade data from Vietnam are provided by investors.

Vietnam joins Thailand, Hong Kong and South Korea in reporting trade data this week, which will give an insight into how Asia has started the year in terms of trade with the rest of the world.

Since the epidemic and Russia's invasion of Ukraine, global trade has held up pretty well since the beginning of the decade but economists agree that globalization probably peaked more than a decade ago. If this resilience persists, the outlook for emerging markets may be a bit brighter.

There are three key developments that could lead to more direction for markets on Tuesday:

The incoming Bank of Japan deputy governors Himino and Uchida testify to Parliament.