Asia week ahead - G20 meeting risks ahead

US monetary policy views

While the markets await the G20 meeting with bated breath, the series of Fed updates and US data will colour the week. The concerns of further Fed tightening remain central to global markets in light of the weight from expectations of a global growth slowdown.

Fed minutes from their November meeting will be released on Thursday, one to be scrutinized for the meeting statement’s latest recognition of business investment slowdown. Fed chair Jerome Powell will also be speaking on Wednesday and having kept the broadly optimistic tone in his last appearance, the Fed official will be heavily watched for any signs that he could be joining his more dovish colleagues. This is particularly so with November looking set to see a consecutive month of drop for global equity market with the likes of the S&P 500 index down 2.3% month-to-date. Meanwhile, a series of data will also be anticipated including the second reading of US Q3 GDP, October core PCE, personal income and spending, and preliminary November conference board consumer confidence index.

For the US dollar index, there had been some signs of a bearish divergence despite the short-term uptrend. Watch for any potential of a slide lower should more dovish rhetoric arrive or data disappoint.

China PMI slowdown?

Asia markets would be finding a series of key releases during our hours with the highlight being China’s November NBS PMI readings. Having seen the figure soften to a 2-year low of 50.2 for the manufacturing gauge, thus dragging on regional indices, the fear is for a repeat next week. Early consensus points to further dips to the 50.0 mark, closing on contractionary territory, one to watch. The bias is tilted to the downside with the potential PMI gloom and likelihood of risk aversion ahead of the Trump-Xi meeting.

Other releases worth watching includes retail sales, industrial production, employment and consumer confidence from Japan. The local Singapore market will also update October’s industrial production performance. Evidently, the waiting game for the G20 meeting continues and it may not be until the following week that we would get more definitive direction for Asia equity markets.