Marketmind: Markets buoyant, but weekend fade looms

By Jamie McGeever

(Reuters) – A look at the day ahead in Asian markets from Jamie McGeever, financial markets columnist.

Asian markets are poised to round off a positive week on a more subdued note on Friday, with concerns over world growth countering any optimism from another slide in U.S. Treasury yields and global oil prices.

The Asia Pacific economic data and policy calendar on Friday is very light, with only Malaysian third quarter GDP and current account reports scheduled for release.

Malaysia’s economy probably grew at a 3.0% annual rate in the July-September period, according to a Reuters poll, slightly faster than 2.9% in Q2. Ahead of the data the ringgit is trading around 4.6850 per dollar, near last month’s 25-year low of 4.79 per dollar.

Anyone hoping for market-moving news from the Asia Pacific Economic Cooperation forum in San Francisco will have been disappointed. The gathering of APEC leaders has been cordial and cooperative but, viewed through an economic and market lens, lacking any real substance.

The same largely applies to the much-anticipated summit between U.S. President Joe Biden and Chinese President Xi Jinping.

Investor worries over the health of China’s economy refuse to dissipate. The latest data show house prices fell for a fourth month in October and could fall further, and weak Japanese exports were in part due to soft demand from China.

Bucking the wider regional trend, China’s CSI 300 blue chip index is poised for a slender decline, its first in four weeks.

The equity index is up 3.5% so far this week, its best week since July and third best of the year, and 225 is set for its third weekly rise in a row, its best run since June.

The backdrop to Friday’s market activity in Asia is further evidence that disinflationary pressures are spreading in the U.S. economy and beyond.

Data on Thursday showed that U.S. jobless claims rose to a three-month high and industrial production fell at its fastest rate this year. Capacity utilization slid to a two-year low, and global oil prices fell sharply again too – futures hit a four-month low and are now down 16% year-on-year.

Fading inflation puts downward pressure on interest rates and market borrowing costs, and U.S. Treasury yields fell as much as 10 basis points across the curve.

All else equal, this weakens the dollar and supports risk assets like equities and emerging assets. But Wall Street failed to bounce and the dollar stood its ground on Thursday, hinting at a more defensive and cautious stance from many investors.

If this filters through to Asia on Friday, the week may peter out with a whimper rather than a bang.

Here are key developments that could provide more direction to markets on Friday:

– Malaysia current account (Q3)

– Malaysia GDP (Q3)

– Fed’s Barr, Collins, Daly and Goolsbee speak

(By Jamie McGeever; Editing by Josie Kao)