Marketmind: A nervous end to a jittery week

By Jamie McGeever

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

Asian markets look poised to end the week on a nervous note on Friday, after soft U.S. and Chinese data stoked worries about the global economy and ensured a jittery day on world markets on Thursday.

The main economic indicators in Asia on Friday are Q1 GDP from Malaysia and Hong Kong, and Indian CPI inflation for April. Japan’s full-year corporate earnings season rolls on, while G7 finance chiefs meet for a second day in Niigata, Japan.

Thursday’s global market action was marked by a solid rise in the dollar, flattening U.S. yield curves, a weak day on Wall Street with U.S. regional banks falling again, and another rate hike from the Bank of England.

Figures on Friday are expected to show that Malaysia’s economic growth slowed in the first quarter, hit by tepid consumption and declining exports. The consensus forecast in a Reuters poll of economists is for annual growth to have slowed to 4.8% from 7.0% in the preceding quarter.

The range of forecasts is wide, however, underscoring the uncertain outlook for the trade-reliant economy.

India’s consumer price inflation in April, meanwhile, is expected to have cooled to an 18-month low of 4.80% from 5.66% in March, keeping it below the Reserve Bank of India’s upper tolerance limit for the second consecutive month.

With falling food inflation pushing overall inflation down, traders are pricing in almost 50 basis points of rate cuts from the Reserve Bank of India this year.

Traders may also be anticipating some sort of policy easing from Chinese authorities after another shocker of an economic indicator on Thursday – not only did CPI inflation undershoot forecasts, it virtually evaporated all together.

While most central banks are still fighting to bring inflation down, the world’s second largest economy is battling against disinflationary forces – annual producer price inflation in April sank to -3.6%, the weakest in three years.

This follows the collapse of imports in April reported earlier this week, raising serious doubts about the strength of domestic demand and growth momentum across the wider economy.

Chinese stocks on Thursday lost ground for the third day in a row and are on course for their third straight weekly loss.

On a brighter note, U.S.-China relations have thawed a bit after the Biden administration’s top security adviser met with China’s top diplomat this week in Vienna, one of the few high-level meetings between the superpowers since the Chinese spy balloon saga in February.

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

– G7 finance ministers meeting (Japan)

– Japan corporate earnings (Full year)

– India CPI inflation (April)

(By Jamie McGeever)

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