Japanese inflation figures for March and the first insights into economic activity around the world this month from flash PMI reports grab the spotlight on Friday, as investors reflect on mounting evidence of slowing U.S. economic and earnings growth. Asian stocks - ex-Japan - are set for their worst week in six, a fate likely sealed by Wall Street's slide Thursday after figures showed an increase in U.S. jobless claims and a much steeper-than-forecast slump in a key regional U.S. manufacturing index. The Q1 U.S. earnings season took a bearish turn too as Tesla posted its lowest quarterly gross margin in two years and AT&T and American Express missed market estimates for revenue and profit, respectively. Steep falls in the shares of these companies and regional banks, a major source of investor concern, dragged down the main indices. Lower bond yields failed to improve sentiment - recession fears pushed oil prices lower too - and this sense of gloom and unease is likely to set the tone at the open in Asia on Friday.
On the economic data front in Asia, figures are expected to show
that core consumer inflation in Japan held steady at 3.1% in
March, highlighting persistent price strains and keeping the
central bank under pressure to ditch its super-loose 'yield
curve control' policy.
This is the first major economic indicator since new Bank of
Japan Governor Kazuo Ueda took over earlier this month. He has
insisted that the current monetary easing will remain in place
for now, damping down prospects of a shift at his debut policy
review on April 27-28, in which the central bank reviews its
inflation and growth forecasts.
Ueda's dovish comments have certainly been welcomed overseas.
Foreign investors poured nearly $12 billion into Japanese
equities last week, their biggest weekly net purchases since at
least January 2018.
The flash purchasing managers index reports for Australia
and Japan are released on Friday. Australian manufacturing and
services activity contracted in March, as did Japan's
manufacturing sector.
Here are three key developments that could provide more direction to markets on Friday: - Japan inflation (March) - Japan and Australia flash PMIs (April) - South Korea producer price inflation (March) <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Japan core inflation MSCI Asia ex-Japan index - weekly change ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (By Jamie McGeever;)
jamie.mcgeever.thomsonreuters.com@reuters.net))