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By Jamie McGeever
(Reuters) – A glimpse into the future in Asian markets.
Chinese trade earnings and Australian inflation top the Asia-Pacific economic calendar on Wednesday, amid fairly corporate global equity markets and risk appetite ahead of key U. S. inflation data due later this week.
Economic, advertising and political arenas are also expected to collide in Beijing, where Chinese President Xi Jinping will meet with U. S. leaders, according to three sources familiar with the matter, following his November dinner with U. S. investors in San Francisco.
The meeting with Xi follows Chinese Premier Li Qiang’s absence from the meeting with foreign CEOs who visited the China Development Forum in Beijing on March 24-25, reviving considerations about the transparency of China’s economy and deteriorating economic ties with the United States.
But Xi’s non-public intervention may simply be a sign of his commitment to ensuring that China is open to Sino-American business and relations, or at least preventing them from deteriorating further.
The Chinese economy, markets, and investors could benefit from some smart news.
Chinese stocks are on track for their first quarterly profit in four quarters, but that’s due to a strong rebound from a five-year low in February that has since faded: Chinese stocks are up slightly in the month of March.
This has also hurt Asian stocks: the MSCI Asia ex-Japan Index is up just 1% this year, behind the MSCI World (-7%) and the MSCI World Emerging Markets Index (-1. 5%).
Figures released on Wednesday will offer a first glimpse into the adequacy of Chinese trading companies’ profitability this year, with figures for January and February to be released.
Industrial profits fell 2. 3% in 2023, their second consecutive annual decline. But there were some signs of improvement at the end of last year: Profits rose 16. 8% in December from a year earlier, ending its gains for a fifth month.
The other key economic indicator on Wednesday is February’s Australian customer inflation. Economists expect the annual rate to rise to 3. 5% from 3. 4% in January.
Australian yield investors don’t expect the Reserve Bank of Australia to start cutting rates until September and are pricing in just 40 basis points easing this year.
Meanwhile, the yen remains dangerously close to its lowest levels seen since 1990. Japanese officials are stepping up their verbal interventions — Finance Minister Shunichi Suzuki warned Tuesday that “rapid currency movements are desirable — but that doesn’t translate into much prospect of improvement. By the yen. the yen.
This would possibly only happen if there is enough of a drop in US yields and rate expectations, which would possibly not happen until US PCE inflation is released. on Friday. However, a warmer-than-expected report and the yen may also temporarily drop above 152 to the dollar and force Tokyo to act.
Here are the key developments that may provide further direction to markets on Wednesday:
– Chinese Industrial Profits (January, February)
– Chinese President Xi Jinping meets with U. S. leaders.
– Australian Consumer Inflation (February)
(By Jamie McGeever; editing by Josie Kao)