China dark vs vroom Wall St By Reuters

By Jamie McGeever

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

Asia kicks off the trading week on Monday, with investors likely to weigh heavily on yet another batch of uniformly disappointing economic indicators from China, while cheering one of Wall Street’s best weeks of the year.

Fueled by growing hopes that the Federal Reserve will begin its interest rate cut cycle with a 50 basis point cut, rather than a quarter-point move, later this week, US stocks rose solidly on Friday , which could provide a good deal for Asia on Monday.

It came within 1 percent of its July 15 all-time high, and the Nasdaq ended the week up 6 percent, its best week since October. Volatility across asset classes has eased – the Treasury Implied Volatility “MOVE” index is at its lowest since late July.

That’s the backdrop to the start of a hugely important week for markets around the world, culminating in the Fed’s rate decision and revised economic forecasts on Wednesday, but perhaps even more so for Asian markets.

Japan and Hong Kong release inflation data and there are monetary policy decisions from Indonesia, Taiwan, China and the Bank of Japan later in the week. The local focus on Monday will be China and another wave of worrying economic data.

There are those in the more speculative corners of the investment community with a higher tolerance for risk, such as hedge funds, who must be looking at China right now as an attractive bet.

Stocks have fallen 15% in a few months and are flirting with their lowest levels in nearly six years, deflation hangs heavy over the economy, the outlook for growth is dimming, and the authorities seem unable or unwilling to unleash the stimulus needed to turn it all around. around.

Capital inflows are drying up and outflows are rising, forcing the central bank to act more vigorously to protect the exchange rate. Indeed, the yuan has strengthened considerably in recent weeks.

But the data released on Saturday gave no indication that a broader, more lasting shift is in the offing. If anything, they suggest such a scenario is as remote as ever.

Official figures on Saturday showed that new home prices fell at the fastest pace in nine years, industrial output growth slowed to a five-month low, foreign direct investment fell 31.5% and retail sales down even more.

And on Friday, meanwhile, the Biden administration blocked steep tariff hikes on Chinese imports, including a 100 percent tax on electric vehicles. Beijing said it would take “necessary measures to resolutely defend the interests of Chinese companies”.

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

– wholesale price inflation in Germany (August)

– New York Fed Manufacturing Index (September)

– 3-month and 6-month US Treasury auctions