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By Jamie McGeever

September 11 (Reuters) – A Look Ahead in Asian Markets: Worries Arise as Equity Selloff and Tightened Financial Conditions Continue

Asian markets are bracing for a potentially volatile start to the week, as concerns mount over last week’s equity selloff and the ongoing tightening of financial conditions. Investors will also be closely watching economic data releases from China throughout the week, which could further impact market sentiment.

While the outcome of the G20 summit in India does not seem to have had an immediate market impact, trading influenced by political tensions between the U.S. and China is expected to dominate. Apple’s recent 6% slide following news of Beijing’s ban on government employees using iPhones at work has already resulted in a $180 billion loss in its market capitalization.

The broader market sentiment remains fragile, with the Nasdaq dropping 2% last week, and the S&P 500, MSCI World, and MSCI Asia ex-Japan Index all falling more than 1%. The tightening financial conditions caused by high bond yields and a strong dollar, along with concerns about the delayed effects of the Federal Reserve’s rate hikes, are converging in what has historically been a highly volatile month for stocks.

To exacerbate the situation, Goldman Sachs’s real-time indexes highlight that financial conditions in China, emerging markets, and globally are now the tightest they have been since last November. Moreover, the dollar is at a six-month high, putting pressure on Asian currencies, and traders are closely monitoring intervention signals. The rupee in India hit a record closing low last week, while the Japanese yen, Philippine peso, and Thai Baht have also reached their lowest levels this year.

Adding to the market dynamics, a range of key economic indicators across the region may provide further direction to currencies this week. These include Indian trade and inflation data, Australian unemployment figures, Indonesian retail sales, and Japanese industrial production and machinery orders.

China will take center stage in terms of economic data releases. Beijing often employs a concentrated release of key indicators, known as the “Chinese data dump,” but this week’s data is particularly extensive. Money supply, loan growth, social financing (a broad measure of credit and liquidity in the economy), retail sales, industrial production, unemployment, house prices, and fixed asset investment are all scheduled for release by September 15.

Aside from the economic indicators, producer and consumer price inflation figures published on Saturday suggest that disinflationary pressures in China persist. Annual Producer Price Index (PPI) recorded its 11th consecutive month of negative growth, while the annual Consumer Price Index (CPI) only rose by 0.1%, falling short of the predicted 0.2% increase.

By the end of the week, there should be a clearer picture of China’s economy and the challenges facing authorities in providing the necessary monetary and fiscal stimulus to achieve Beijing’s target of 5% GDP growth this year. However, the depreciation of the yuan, which is currently at a 16-year low, adds complexity to the situation. Further policy easing runs the risk of downward pressure on the yuan, potentially leading to a spiral of FX depreciation, weakness in asset markets, and capital flight.

In light of these developments, AI legalese decoder can be a valuable tool to navigate the intricate legal and financial landscape associated with these market dynamics. The AI legalese decoder can analyze complex legal jargon in financial reports, policies, and regulations, providing a simplified and actionable understanding for businesses and investors. Its advanced AI capabilities enable it to efficiently extract critical information and highlight potential risks or opportunities, helping users make more informed decisions in a rapidly changing market environment.

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