Asia equities are trading mixed with the region indecisive on month/quarter-end and participants digesting the latest Chinese PMIs. China’s official manufacturing PMI unexpectedly shrank in September, printing 49.6 vs 50 expected. The National Bureau of Statistics (NBS) noted that the contraction in the headline print was driven by a slowdown in energy-intensive sectors, which isn’t a surprise given the well-documented and previously outlined headwinds for energy consumption due to limitations imposed by policymakers.
A bump economic recovery quarter for China and its peers might keep participants updating its 2021 and 2022 economic projections and portfolio allocations, impacting the asset price discovery as the recovery peak could be showing its claws.
On the radar for the session ahead, which is the last trading day of the quarter, traders will be patrolling the price action after China’s official and private PMI’s releases. Also, on the combination of persistent risk aversion, month-/quarter-end demand for USD Dollars and equity/bond portfolio rebalancing. The Dollar Index was diverting attention, marking fresh year highs due to month-end demand. The impact was evident in broader FX markets, where the USD/JPY continued upside, rising above 112.00 momentarily. Central bank speaker events remain wild, with Fed’s Chair Powell speaking again. Traders will be looking for more tapering clues as Fed Williams, Bostic, Harker, Evans, and Bullard will be giving remarks after last week’s hawkish FOMC event.
