Week Ahead: Asian Stock Markets To Open On A Positive Note
By Satya Nagendra | October 6, 2012 8:13 PM EST
Stock markets in Asia are expected to begin the week on a positive note after official data Friday showed that the U.S. unemployment rate unexpectedly fell to a near four-year low in September.
The U.S. Labor Department reported that unemployment rate in the world’s largest economy fell to 7.8 percent in September, the lowest level since President Barack Obama took office, while 114,000 new non-farm jobs were added in September, slightly better than Reuters’ estimate of 113,000 jobs.
Asian stock markets mostly ended with gains last week as sentiment was buoyed following the better-than-expected U.S. economic data and the ECB President Mario Draghi’s comment that the ECB was ready to buy the bonds of the troubled euro zone nations. However, the weak economic reports from Japan and the Bank of Japan’s decision to keep its monetary policy unchanged weighed on the Nikkei.
Markets are expected to regain some momentum as China returns after a weeklong holiday closure. Sentiment will remain driven by global factors this week in the absence of any major regional risk events and a light calendar for economic news.
“Regardless of a return of an appetite for risky assets during Q3, the global economy is not sending encouraging signals. Growth (annual rate) is below 2 percent in the US. The Eurozone is still in a mild recession while China economic performance remains disappointing. The figures to be released in the next couple of days should not change this general impression of worrying weakness,” said a note from Credit Agricole.
In Japan, current account surplus for the of August is expected to be narrowed to 257.0 billion yen compared to 335.4 billion yen in July as the seasonal merchandise trade deficit for August showed a wider trade deficit at 472.8 billion yen and is expected to weigh on current balance. August machinery orders are expected to decline by 3.5 percent on a monthly basis following two straight months of increase.
The Bank of Korea (BoK) is likely to cut its key policy rate by 25bp to 2.75 percent Thursday as inflation remained at the bottom end of the BoK’s target range of 2 to 4 percent this year, leaving room for further easing.
Meanwhile, market participants are likely to turn their attention to the U.S. as the earnings season is set to kick off with U.S. aluminum producer Alcoa slated to report quarterly results after the market closes Tuesday. Analysts are expecting a third quarter profit of less than one cent per share, down from 15 cents per share in the same quarter a year ago. Other major companies like Wells Fargo, JPMorgan Chase & Co, Yum! Brands and Costco Wholesale will report their quarterly earnings during the week.
"It's a divergence right now where the valuations as far as equity prices (are concerned) have soared, and are really putting in place a stronger economy and stronger fundamentals. But earnings will be the telltale sign and if the guidance isn't particularly strong, the market might be setting itself up for a little disappointment. I don't see a major correction, but I do see a pullback,” Alan Lancz, president of Alan B. Lancz & Associates Inc., an investment advisory firm in Toledo, Ohio, told Reuters.
To contact the editor, e-mail:
Most Popular Slideshows
- After Win Over Maidana, Mayweather Says He Is Prepared To Negotiate A Fight With Pacquiao
- Still The World Champions: Team USA Overpowers Serbia, 129-92 To Win 2014 FIBA World Cup [PHOTOS]
- From Fat To Fit: Celebrities Who Were Overweight Before They Became The Beauties That They Are
- Kendall Jenner Could Be Next Victoria's Secret Angel [PHOTOS]
Join the Conversation
- Tourre on stand says email in SEC case 'not accurate'
- Syrian authorities blocking access to needy in Homs - Red Cross
- Faith in European Union at low ebb, EU poll says
- Former UBS banker gets 18 months, $1 million fine, for muni bid-rigging scheme
- U.S. judge halts challenges to Detroit's bankruptcy bid
- iOS 8 Release Date Of Sept 17 Has Arrived: Update Begins At 10AM Pacific Time, Upgrade Your iDevices With iOS 7.1.2 First To Install iOS 8
- Pregnant Kate Middleton May Call Off Malta Trip Due To Sickness: Royal Couple Will Move To Anmer Hall Residence
- Why Samsung Galaxy S5 Is Not The Best Smartphone To Purchase Now? If You Still Want To, Wait For A Month To Get It Cheap
- Apple iPad Air 2, iPad Mini 3 October Release Date Roundup: Freshly Leaked Protective Case Debuts Unique Vent Alongside Camera
- Ukraine Crisis: Poland Denies Supplying Weapons To Kiev
- Google Nexus 8 Release Date Countdown Begins Oct 8: 8 Killer Specs and Features to Expect
- Canadian IS Jihadist Who Wants to ‘Play Soccer’ with Heads of US Decapitated Soldiers