Preparing for strong sales By Reuters

By Jamie McGeever

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

Asian shares are set to open sharply lower on Monday, following Wall Street’s decline on Friday after investors interpreted US jobs data and comments from senior Fed officials as the ‘worst of both worlds’ – weakness additional labor market but little appetite to cut interest rates by 50 basis points next week.

Japanese futures opened down more than 3%, also dragged down by the yen’s strength, another sign of risk aversion permeating global markets.

Friday’s losses in The and Dow secured their biggest weekly decline since March 2023, and the Nasdaq’s 2.6% drop confirmed its biggest weekly loss since January 2022.

If heightened anxiety about the US economic and political outlook wasn’t enough, the Asian calendar is packed with top economic indicators from China, Japan and Taiwan that will also have potential global significance.

Japan releases revised bank lending, trade, current account and GDP growth figures, Taiwan releases trade data and, perhaps most importantly, China releases producer and consumer price inflation figures.

Overseas investors are becoming more cautious about Asian stocks. LSEG data shows they were net sellers in August, while JP Morgan recently dropped its buy recommendation on Chinese shares. Chinese stocks closed at seven-month lows on Friday.

The signals coming out of the United States on Friday were perhaps more nuanced than the markets’ negative reaction would suggest. The unemployment rate fell, wage growth accelerated and officials reaffirmed their confidence in a “soft landing.”

Fed Governor Christopher Waller or New York Fed President John Williams said on Friday it was time to cut rates. But in prepared remarks and question-and-answer sessions, none signaled that a 50-basis-point cut was on the way.

Meanwhile, oil and commodity prices are falling rapidly, another sign of growing unease among investors about the global economic picture. Monday’s Asia calendar will provide a few more pieces of that puzzle.

Figures from Beijing are expected to show that annual consumer inflation in China rose to 0.7 percent in August from 0.5 percent in July.

This would be a welcome development. But the fight against deflation is far from over – data on Monday is expected to show factory-gate prices fell 1.4% year-on-year in August, almost twice the 0.8% drop from July.

Former central bank governor Yi Gang on Friday urged the country to do more to combat deflationary pressures with more fiscal stimulus and accommodative monetary policy.

Japan’s second-quarter GDP growth is expected to be revised slightly upward, while Taiwan’s export growth is expected to have more than doubled in August to 7.35 percent. Taiwan’s TSMC is the world’s largest chip maker and Nvidia’s (NASDAQ: ) chip manufacturing partner.

Here are the key developments that could provide more direction for Asian markets on Monday:

– China PPI, CPI inflation (August)

– Japan’s GDP (Q2, revised)

– trade with Taiwan (August)