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What’s important in Asia this week

Tomohiro Ohsumi | Bloomberg | Getty Images

A raft of data from China is likely to put the world's second-largest economy back in focus for Asian markets this week, with central bank meetings in Australia, Japan and South Korea also on the calendar.

At the weekend, China released better than expected data on the services sector. The non-manufacturing purchasing managers' index (PMI) rose to 54.1 last month from June's 53.9, the National Bureau of Statistics (NBS) said in a statement on Saturday.

(Read more: Is China's outlook improving? Services sector picks up)

The data momentum is set to continue when the government releases July trade data on Thursday, while the latest consumer price index, producer price index, industrial output, fixed asset investment and retail sales numbers are expected towards the end of the week.

"We will watch the slew of data from China closely," said analysts at Nomura in a research note.

"We expect mixed signals from the July data as industrial production is likely to improve slightly to 9.0 percent year-on-year, in line with the rise of the official PMI's production component, while fixed asset investment may have moderated to 19.8 percent year-on-year, partly due to extremely high temperatures this July which may have slowed progress of some investment projects," they said.

(Read more: China PMI could mark end of negative data surprises)

Data last week showed China's official manufacturing PMI rose to 50.3 in July from 50.1 in June, beating expectations. Analysts said the data could be a sign of stabilization in the Chinese economy.

Analysts polled by Reuters forecast a 4.8 percent rise in July exports from a year earlier, compared with a 3.1 percent fall the previous month.

Rate cut coming?

Down under, the Reserve Bank of Australia is widely expected to cut its benchmark lending rate by 25 basis points to a record low of 2.50 percent on Tuesday. But what could dominate focus are political developments after Prime Minister Kevin Rudd on Sunday called for general elections to be held on September 7.

"The RBA decision tomorrow is almost a non-event. 26 out of 27 economists are calling for a cut tomorrow and the swaps market is currently trading at 91 percent chance of a 25 basis point cut," Evan Lucas, market strategist at IG Markets said in a note.

(Read more: How low must the Aussie go before the RBA backs off?)

Lucas said the decision has been mostly priced in, but traders will be watching closely for hints for the cut will be this year's last.

"If the RBA suggest that tomorrow's cut is the last for the interim cycle it might see the Aussie dollar moving higher as easing relaxes," Lucas wrote.

"The other train of thought could see the RBA go the complete opposite direction and change the statement to an easing bias with a dovish outlook. This will drive the Aussie dollar and see a second rate cut expectation in the later quarter of the year increasing," he added.

On the election front, IG reiterated a warning for stock markets should the results become too close to call.

"As far as we can see, what will increase volatility is the prospect of another hung parliament. Current polling suggests both major parties are neck and neck. If this does eventuate on polling day, another three years of cautious trade could be on the cards – whoever wins and the local economy really cannot handle this," Lucas said.

(Read more: Why a Rudd revival spells bad news for Aussie stocks)

Australia will also get a dose of data deluge, with retail sales figures, the trade balance, the employment change and the unemployment rate all due over the next five days.

Other events

The Bank of Japan meanwhile (BOJ) concludes a two-day meeting on Thursday – the same day that South Korea's central bank is scheduled to meet.

Analysts do not expect any major policy changes from the two central banks.

"In Korea, we expect the Bank of Korea to keep its policy rate on hold at 2.50 percent and in Japan the BOJ's policy board will probably vote to leave conditions unchanged," analysts at Bank of America Merrill Lynch said in a note.

Also due out this week are Taiwan's July consumer price index on Monday, Australian June trade data on Tuesday and Malaysian trade numbers on Wednesday.

(Read more: Time to bet on Chinese exporters: Goldman Sachs)

The corporate earnings season also continues with HSBC due to report its results on Monday, followed by global miner Rio Tinto and Taiwan's TSMC later in the week.

Markets in Indonesia, Malaysia and Singapore are closed on Thursday and Friday for a holiday.

— By CNBC.com's Dhara Ranasinghe; follow her on Twitter@DharaCNBC

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