Morning bid: Tightest financial conditions this year bite
By Jamie McGeever
(Reuters) — A look at the day ahead in Asian markets from Jamie McGeever, financial markets columnist.
Asian markets are set for a nervous open on Monday as worries mount that last week's equity selloff could accelerate, financial conditions continue to tighten, and investors brace for a raft of economic data from China throughout the week.
There seems to be no obvious market impact from the G20 summit in India, and politically-influenced trading will likely be dominated by U.S.-China tensions. Last week Apple (NASDAQ:AAPL)'s 6% slide wiped $180 billion off its market cap on news that Beijing had banned government employees from using iPhones at work.
Broader market sentiment is fragile. The Nasdaq shed 2% last week, and the S&P 500, MSCI World and MSCI Asia ex-Japan Index all fell more than 1%.
Tightening financial conditions from high bond yields and a strong dollar, and unease about the looming lag effects of the Fed's rate hikes are coming together in what has been historically a notoriously volatile month for stocks.
According to Goldman Sachs's real-time indexes, financial conditions in China, emerging markets and globally are now the tightest since last November.
The dollar is at a six-month high, Asian currencies are feeling the heat, and traders are on intervention alert — India's rupee posted a record closing low on Thursday and the Japanese yen, Philippine peso and Thai Baht are at their lowest levels this year.
Currencies may also get direction from a sprinkling of key economic indicators across the region this week — Indian trade and inflation, Australian unemployment, Indonesia retail sales, and Japanese industrial production and machinery orders.
The economic data spotlight this week
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