Japan Economy Sputters; US GDP Eyed

This is a transcript of top stories presented by China's CCTV Business Channel as produced by CNBC Asia Pacific.

Hello and welcome.

You're watching "Asia Market Daily".

I am Saijal Patel reporting from CNBC's Asian headquarters, and here are the top stories across the region today.

Our first stop Japan where there are signs that the economic expansion there is poise to slow. Data out today showed that Japan's unemployment unexpectedly rose for a fourth straight month and industrial production fell the most in more than a year. The jobless rate climbed to a seven-month high of 5.3 percent in June. Factory output slid 1.5 percent from May, economists had expected a point-2 percent gain. Meantime, consumer prices declined 1 percent from a year before - marking it's 16th month of decline. The data suggests domestic demand remains tepid, raising concern about Japan's efforts to combat deflation

(SOT) Naomi Fink, Japan Strategist, Bank of Tokyo Mitsubishi:

"I think the DPJ and Japan faces the same challenge, that is faced at the beginning of the recovery, namely that is how to get domestic demand to expand sustainably, and not only depend on expansion in exports, which after all, will become more volatile, if we're depending on demand on emerging markets, including China. And I think the data tells us that we haven't achieved sustainable domestic demand yet... If we see depression of prices based on poor demand then obviously that is an extension of Japan's deflationary problem."

Meanwhile, the International Monetary Fund is urging China to boost domestic consumption and let its currency strengthen. If not, China will face a ballooning trade surplus. In a sign of warming ties between the fund and China, Beijing allowed the IMF to publish its review after blocking it for the last few years.

(SOT) Nigel Chalk, China Mission Chief, IMF:

''We try to base our assessment on much broader range of fact as we look at the level of foreign currency intervention in China, which obviously is quite high. The reserves are high. We look at what's happening with things like productivity in China in terms of trade, with prices of imports and exports, and we also look at where the current account is heading over the more medium-term. And what our interest, I think, is we feel that a balanced Chinese economy is an economy that doesn't have a large current account, certainly not at the levels that we saw in 2007. And so our view is that the reforms need to be put in place to ensure that that current account doesn't reassert itself."

And now for market action around the region. A slew of solid earnings from Asian companies were not able to prop up the markets as caution rules ahead of key GDP numbers out U.S. tonight. Many are expecting growth to slow in the second quarter. Some analysts say the gems from the current U.S. earnings season should outshine the data.

(SOT) Mikio Kumada, Executive Director, LGT Capital Management:

"This is the third revision, so I wouldn't put too much, I mean, we know that their quarter May was probably most disappointing, so even if they revised it down, it may even be a positive thing, because you know, we've done it. I think what is more important is that these earnings are, the people realize that they are getting a lot of profit, a lot of earnings out of the companies they own, if they own any, and I think that's the most important thing. So our expectations are not so much with the economic data."

And now for a closer look at the Japan markets where the benchmark Nikkei 225 closed down by 1.64 percent, sent lower by worse than expected economic data. But, Uwe Parpart of Cantor Fitzgerald is still keen on the Japan's financial sector.

(SOT) Uwe Parpart, Chief Economist and Strategist, Asia, Cantor Fitzgerald:

"I think its the large banks will outperform going forward, because they got a break from the new Basel III rules that will be approved at the Seoul G20 summit, which allows Japanese banks to count their deferred tax assets into tier one capital, and that's a big break for the Japanese banks."

Meantime, Seoul shares retreated led by Samsung Electronics. Although the world's No.1 memory chip maker had announced record quarterly profits it also warned of weak margins ahead. The KOSPI finished point-65 percent lower.

In Australia, the S&P ASX 200 was down by 6- tenths of a percent. Banks led the decline and the Macquarie Group was a major loser after issuing a profit warning. A merger in Australia's agricultural sector had also created a stir- Graincorp is to buy smaller smaller rival AWB in an all-share offer worth about A$1.8 billion.

(SOT) Patrick Noble, Senior Investment Specialist, Zurich Investment Specialists:

"Well, I suppose if history is any guide, it probably doesn't favor grain corp, and clearly the markets are looking like it favor, the winner in this deal so far is actually AWB... They haven't exactly set themselves alive with corporate governance in the past, that's been settling the stock. They have been talking about re-structuring the company for a while, and now that strategy is up to Graincorp."

Greater China shares also track the region lower on profit taking in banks and property stocks. The big story there -- Li Ka-Shing's Cheung Kong Infrastructure and Hong Kong Electric announce plans to buy EDF's power grid assets in the UK for $9.1 billion.

Over in India, the benchmark index is set for its first weekly slide in a month.

We go now to CNBC-TV 18 reporter, Sonia Shenoy on the key issues to look out for next week.

In terms of economic data that you need to watch out for, auto sales numbers will be out on the 1st of this month. This time around, there seems to be some slowdown in the pace of growth that the autos are seen in terms of volume gains. Now on the 2nd of August, you have the Indian manufacturing PMI for July that will be released. And the primary articles inflation numbers will be released on the 5th August. Remember the RBI has hiked the interest rates in order to tame inflation, and this is the fourth successive interest rate hike that is coming this year alone. On that account, there is lots of pressure on the inflation to be reduced from those double digit numbers of about 11%.

The rainfall data for the weekend of August too will be detailed by the IMB on the 5th August. So here're a couple of highlights that you can watch out for next week.

Thank you Sonia, looks like it's going to be a heavy week of data for India.

Meantime, all eyes will be on the U.S. which will be announcing its second quarter Gross Domestic Product numbers later this evening.

CNBC's Rick Santelli reports.

We all know that some earnings have been pretty good, there have been some misses. we also know that the bar was pretty low in terms of what we will be expecting, but really that's a subjective call. If you want to look at the data, hard data, tomorrow's GDP is following a couple of courses, the 5.6, the 2.7, tomorrow's call is for 2.5ish, some lower, some a little higher. A month ago, the expectation was much closer if not up at 3 percent, so this is going to give us a rate of change view of GDP over the last several quarters, and it's going to be a very critical one of course."

Well, that wraps up today's business highlights.

I'm Saijal Patel from CNBC.

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