Asian markets experienced a mixed performance on Monday, as anticipation of a US interest rate cut was countered by concerns over China’s economic outlook following the release of underwhelming data. Despite a strong finish on Wall Street, Asian markets struggled to keep pace. While Tokyo, Sydney, Singapore, Seoul, Mumbai, Manila, Wellington, and Jakarta saw gains, Hong Kong, Bangkok, and Taipei experienced losses. European markets, including London, Paris, and Frankfurt, also fell at the open.
The Federal Reserve’s preferred inflation gauge, the personal consumption expenditures index, decreased in line with expectations in July, setting the stage for a potential ease in monetary policy this month. Attention now shifts to the release of the non-farm payrolls report, which will provide insight into the US economy’s performance. A rate cut has been priced in, but the data could influence the magnitude of the cut.
Meanwhile, China’s economic concerns intensified after a report showed a contraction in the manufacturing sector for the fourth consecutive month, exceeding expectations. This has led to calls for fresh stimulus measures, particularly in the troubled property industry, with warnings that the government’s 5% GDP growth target may be missed this year.
Oil prices extended losses due to reports of a planned increase in output from OPEC and other key producers. This has offset concerns about Middle East tensions and Libyan supply disruptions. Key figures showed a mixed performance across markets, with the Nikkei 225 up 0.1%, Hang Seng Index down 1.7%, and FTSE 100 down 0.1%. The dollar/yen exchange rate fell, while the euro/dollar and pound/dollar exchange rates rose. Oil prices also decreased, with West Texas Intermediate down 0.6% and Brent North Sea Crude down 0.7%.
