A smattering of inflation data, PMIs and an interest rate decision will grab investors' attention in the Asian session on Wednesday, against an increasingly gloomy backdrop following the latest warning that the U.S. economy is losing steam. Annual consumer price inflation in the Philippines and Thailand is expected to slow; purchasing managers index surveys for Japan, Australia and India will be released; and New Zealand's central bank is expected to slow the pace of rate hikes to 25 basis points.
Investors go into Wednesday on the defensive. U.S. stocks, the
dollar and Treasury yields all dived on Tuesday after figures
showed a surprise fall in U.S. job openings to the lowest level
in nearly two years.
The monthly 'JOLTS' report comes a day after figures showed that
not only did U.S. manufacturing activity shrink in March at its
fastest pace in three years, all components of the Institute for
Supply Management's survey fell below the 50 growth/contraction
threshold for the first time since 2009.
Global factory activity and global demand are weakening.
Rates markets no longer expect the Fed to raise rates again and
are pricing in 75 basis points of easing this year. But falling
yields and increased rate cut expectations are not supporting
stocks and risk assets - recession fears are growing.
If the Fed does pause tightening campaign, it will be following
the Reserve Bank of Australia, which kept its cash rate
unchanged at 3.6% to break a run of 10 straight hikes.
Australian policymakers said they want time to assess the
impact of past increases as the economy slows and inflation
peaks. A similar message could come from the Reserve Bank of New
Zealand on Wednesday, although it is still expected to hike by
25 bps.
Investors will scrutinize the accompanying commentary for
any hints of an end to its tightening cycle. A slowing U.S. and
global economy, and reverberations of last month's banking
shock, could tempt policymakers to ease up sooner rather than
later.
Here are three key developments that could provide more direction to markets on Wednesday: - New Zealand interest rate decision - The Philippines inflation (March) - Thailand inflation (March) <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ New Zealand interest rates New Zealand GDP, inflation and rates ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (By Jamie McGeever; Editing by Josie Kao)
5607Reuters Messaging: jamie.mcgeever.thomsonreuters.com@reuters.net))