“Asia markets brace for impact as Federal Reserve’s next move remains uncertain, while China PMI shows signs of recovery and India PMI reflects robust growth in manufacturing sector.”
India’s manufacturing activity has risen at the slowest pace since February, according to private surveys by S&P Global. The country’s manufacturing purchasing managers index came in at 55.5, lower than September’s reading of 57.5. Despite the slower growth, the sector continues to improve for the twenty-eighth month in a row. China, on the other hand, is seeing cautious consumers who are pulling back from discretionary spending. Chinese policymakers are confident in achieving their 5% growth target and do not feel the need to inject additional stimulus into the economy. Inflation in India is expected to cool leading up to elections but rise soon after. Supply side dynamics and weather vagaries are key factors that will affect inflation. South Korea saw its first rise in exports in 13 months, while its manufacturing activity remained in contraction. The yen held at over one-year lows against the U.S. dollar, and Japan’s markets saw a strong open after the Bank of Japan increased flexibility around its yield curve control policy. Despite concerns of stagflation and a possible world war, there are still opportunities for investors to “make money” in the short and medium term. JPMorgan strategist urges investors to stay defensive, while Tesla tumbled 20% in October. The Federal Reserve will likely face a “bumpy path” to its 2% inflation target.