5 May 2014
Asia EM Express: China's disappointing manufacturing data weighs on Asian stocks
FXStreet (Łódź) - China's manufacturing activity continued to contract for the fourth running month in April, final PMI data released on Monday showed, pushing Asian share markets lower on deepening economic slowdown woes.
The China HSBC Manufacturing PMI's contraction slowed down slightly however, from 48.0 in March to 48.1 in April, below forecasts of rising to 48.4.
Prashant Newnaha, Asia-Pacific Macro Strategist at TD Securities comments: “We don’t read anything into this release, and continue to expect GDP growth to remain around 7½% into the Jun qtr (from 7.4% in Q1). At least the financial markets appear to have stopped over-reacting to a sub-50 print via howls of 'Chinese hard landing'.”
Meanwhile, China's non-manufacturing PMI, released on Sunday, came in at 54.8 in April, slightly up from 54.5 seen in March,
On Monday Statistics Indonesia informed that on a quarterly basis the country's GDP grew by 0.95% in Q1, compared with the 1.42% drop in Q4 and below expectations of a 1.26% increase. Year-on-year GDP rose 5.21%, down from 5.72% growth and below consensus of +5.60%.
Nomura Reasearch analysts Euben Paracuelles and Lavanya Venkateswaran believe that the disappointing Indonesian GDP results for Q1 “will have significant policy implications.”
“While Bank Indonesia is still unlikely to deviate from its stance of prioritizing stability over growth, this reduces the probability of further rate hikes this year, which we forecast at another 50bp.”
“In terms of fiscal policy, we think the larger-than-expected slowdown will exert more pressure on the fiscal deficit, as revenues fall below budget and the government may be forced to increase spending further in an election year.”
Technicals
At the moment of writing the USD/CNY was down by 0.26% at 6.2423. On Friday the pair's daily FXStreet Trend Index was strongly bullish, with the OB/OS Index overbought. RSI was at 77 at the last close, and has fallen to 31 so far today. The 1D 200 SMA was at 6.1179, while the 1D 20 EMA was at 6.2353.
The China HSBC Manufacturing PMI's contraction slowed down slightly however, from 48.0 in March to 48.1 in April, below forecasts of rising to 48.4.
Prashant Newnaha, Asia-Pacific Macro Strategist at TD Securities comments: “We don’t read anything into this release, and continue to expect GDP growth to remain around 7½% into the Jun qtr (from 7.4% in Q1). At least the financial markets appear to have stopped over-reacting to a sub-50 print via howls of 'Chinese hard landing'.”
Meanwhile, China's non-manufacturing PMI, released on Sunday, came in at 54.8 in April, slightly up from 54.5 seen in March,
On Monday Statistics Indonesia informed that on a quarterly basis the country's GDP grew by 0.95% in Q1, compared with the 1.42% drop in Q4 and below expectations of a 1.26% increase. Year-on-year GDP rose 5.21%, down from 5.72% growth and below consensus of +5.60%.
Nomura Reasearch analysts Euben Paracuelles and Lavanya Venkateswaran believe that the disappointing Indonesian GDP results for Q1 “will have significant policy implications.”
“While Bank Indonesia is still unlikely to deviate from its stance of prioritizing stability over growth, this reduces the probability of further rate hikes this year, which we forecast at another 50bp.”
“In terms of fiscal policy, we think the larger-than-expected slowdown will exert more pressure on the fiscal deficit, as revenues fall below budget and the government may be forced to increase spending further in an election year.”
Technicals
At the moment of writing the USD/CNY was down by 0.26% at 6.2423. On Friday the pair's daily FXStreet Trend Index was strongly bullish, with the OB/OS Index overbought. RSI was at 77 at the last close, and has fallen to 31 so far today. The 1D 200 SMA was at 6.1179, while the 1D 20 EMA was at 6.2353.