Trade with China could disrupt market calm By Reuters

By Jamie McGeever

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

The volatility that plagued global markets last week is giving way to a greater degree of calm earlier this week, and traders enter Tuesday’s session in Asia looking to recoup some recent losses before assessing the next move.

Although risk appetite returned and volatility eased significantly on Monday, there was little change in US interest rate futures on the Fed’s expected easing path – nearly 250 basis points more rate cuts by the end of next year, reflecting significant concerns about the growth outlook.

But with US inflation numbers due on Wednesday, investors may be reluctant to push too much in either direction over the next 36 hours. Asian markets on Tuesday could rely on local drivers.

Economic data releases include Malaysian industrial production, Indonesian retail sales and Australian consumer sentiment and business confidence, while the yen’s upward momentum has stalled and a return below 143.00 per dollar is now looming.

The biggest trigger for markets in Asian hours on Tuesday could be China’s trade data for August, and expectations have been lowered.

Exports likely rose 6.5 percent from a year earlier, down from July’s 7.0 percent rise and the slowest pace in four months, while imports would have risen just 2 percent compared to 7.2 percent in July, according to a Reuters poll. of economists.

Weakening export activity amid fears of rising trade barriers and tariffs would be alarming in itself, but subdued import growth also reflects weak domestic demand. Together, they speak of an economy struggling to generate solid and sustainable growth.

Then there is the cloud of deflation that refuses to lift.

Figures on Monday showed that consumer inflation rose in August to the fastest pace in six months, but the increase was due more to higher food costs due to weather disruptions than a recovery in domestic demand. The annual rate of 0.6% was still lower than forecasts.

More worryingly, producer price deflation has intensified. The producer price index in August fell 1.8 percent from a year earlier, the biggest drop in four months, worse than July’s 0.8 percent drop and below economists’ consensus forecast of a 1.4 drop %.

Factory-gate prices have been in full deflation for two years, a key reason why consumer price inflation is unlikely to accelerate much anytime soon.

Meanwhile, Taiwan’s TSMC, the world’s largest chipmaker, will announce its monthly sales figures for August. Sales in June totaled T$207.87 billion and rose to T$256.95 billion in July.

Taiwanese firms like TSMC are major suppliers to Apple (NASDAQ: ), Nvidia (NASDAQ: ) and other tech giants. Their growth helped lift Taiwan’s August exports to a record monthly high of nearly $44 billion as rising demand for chips to supply the AI ​​industry offset anemic demand in China.

Here are the key developments that could provide more direction for Asian markets on Tuesday: – China trade (August) – TSMC sales figures (August) – Australian consumer confidence (September)