Asian bourses begin positive with mild tailwinds from Wall Street, where the S&P 500 and Nasdaq registered fresh record highs, but the upside was capped with Nonfarm jobs report on the radar. The incoming macro data continues to show that China’s economy is slowing down, with the latest Chinese Caixin services PMI print recorded the first headline contraction for the survey since April ’20, printing at 46.7 versus 52.6 expected. The US Dollar against the Offshore Yuan has edged higher post-release.
On the COVID front, the new wave of infections and China’s slowdown could put some pressure on local assets. Australia’s New South Wales reports 1,431 new COVID-19 cases, and the state Premier expects the next two weeks to worsen COVID infections. The Tech sector in the region could feel some pain as local reports say that China is set to strengthen its review of game content.
On the macro front, the big reading for the season ahead will be the US Nonfarm Payroll report. The consensus looks for the pace of hiring to cool in August, although the short-term trend rates are still likely to improve. Last two days, after some bad and mixed data from the US, markets’ position on macro assets seem to be pricing a more ‘dovish’ print. However, suppose the data surprises the upside. In that case, it may offer hints that the US labour market is making progress towards the Fed’s ‘substantial’ threshold where FOMC members could feel comfortable to adopt a stronger hawkish position ahead of the September meeting.
