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Market Optimism Meets Nervousness as Ebullient Markets Await China’s Data Dump

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Asian Markets Set to End the Week Strongly

Asian markets are expected to have a strong end to the week following positive moves in the U.S. and Europe on Thursday. However, the release of top-tier economic data from China on Friday could potentially impact the market sentiment.

China’s Economic Data Release

China is set to release several key economic indicators for August, including house prices, fixed asset investment, retail sales, industrial production, and unemployment. Here are some expectations:

  • Retail sales and industrial production growth is expected to pick up.
  • Fixed asset investment growth is predicted to slow to a new low of 3.3% (excluding pandemic-related distortions in early 2020).

The People’s Bank of China has stated that it will take appropriate steps to support the economy. However, there is skepticism among economists about Beijing meeting its 5% GDP growth target for this year, and many are revising their 2024 outlooks.

Trade Relations with the West

China’s trade relations with the West continue to deteriorate. Beijing has criticized the European Commission’s probe into China’s electric vehicle subsidies as protectionist and warned of potential damage to economic relations. Analysts have also warned that if the probe results in punitive tariffs, Beijing may take retaliatory action.

Positive Momentum from Wall Street

Despite these concerns, Thursday’s positive momentum from Wall Street may influence Asian markets. Investors welcomed strong U.S. retail sales and accelerating producer prices as a sign of economic resilience. Coupled with falling euro zone bond yields and implied rates after the European Central Bank’s dovish hike, risk assets received a boost.

Key Developments for Friday:

  • China’s data release for August
  • Indonesia trade data for August
  • New Zealand manufacturing PMI for August

Overall, Asian markets are poised for a positive opening on Friday, with the VIX gauge of implied S&P 500 equity volatility registering its lowest close since before the pandemic.

Disclaimer: The opinions expressed in this article are those of the author and do not reflect the views of Reuters News.

About the Author:

Jamie McGeever is a financial journalist with extensive experience reporting on economics, central banks, policymakers, and global markets. He has reported from various locations around the world, including Brazil, Spain, New York, London, and the U.S. Follow him on Twitter: @ReutersJamie.

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