Asian Economic Markets -Weekly Update 21/8/2014
Key Asian markets lost momentum today as reaction to the FOMC notes released yesterday and weaker than expected PMI's out of China and Japan saw opposite responses to the data.
Chinese markets were down after an unexpected drop on the HSBC's Manufacturing PMI. The Purchasers Managers Index posted 51.7 for July and a Reuters poll had forecasted similar 51.5. However, when the figure of 50.3 was announced, its lowest in 3 months many analysts pointed to the reduction in bank lending, especially to private companies as bad loans start to increase and asset values reduce.
China has been seen as a performer lately and their domestic demand has helped keep the economy pushing forward as exports have reduced from the numbers previously seen.
Many feel that there is more stimulus required to turn the World's 2nd largest economy back on track and what has been implemented is taking time to filter through.
The Nikkei 225 has seen its 9th straight day of gains after a run of positive data suggesting that although the Bank of Japan's policies may be small in number, the economy is keeping ahead of the game. With a PMI up from 50.5 to 52.4, its highest since March and the increase in Sales Tax which took place in April there are positive signs in Japan with an increase of 3.2% in exports for July too.
As any number above 50 is a sign of expansion it shows how strongly the China markets react to what is still positive news. It is possible that the notes form the FOMC meeting which were released yesterday and insinuated that there could be a rate increase sooner than thought, may be playing on Asian investors minds.
Geopolitical issues do not seem to be affecting the markets these days and economic indicators barely touch the surface. We can confidently expect that whilst there is plenty of factors which could guide the market, whether it does or not is an entirely different matter.
Key Market Data as of 21/8/2014:
Hang Seng: 24,940.98 (-0.87%) Nikkei 15,586.20 (+0.85%)
Dow: 16,979.13 (+0.35%) S&
FTSE: 6,762.41 (+0.10%) Dax: 9,305.09 (-0.10%)
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