Asian equities under pressure as Chinese data weighs

Asian stock indexes came under pressure in early trading hours on Tuesday following mixed sentiments from Wall Street and as traders awaited Chinese economic reports.

Australia ASX -43.00 -0.71% 6,054.20 OPEN

Shanghai Comp -9.65 -0.28% 3,438.18 OPEN

Hang Seng Index +60.08 +0.21% 29,242.26 OPEN

Nikkei 225 +128.70 +0.58% 22,509.69 OPEN

TSEC 50 Index +20.01 +0.19% 10,703.93 OPEN

China’s fixed asset investment grew 7.3 percent in October, a tick down from the previous month increase of 7.5 percent and a forecasted 7.4 percent.

Industrial production in the world’s largest manufacturing nation rose by 6.2 percent, also missing expectations of a 6.3 percent rise and a prior month 6.6 percent.

On the corporate front, Morgan Stanley is currently looking to expand its investment bank joint venture in China to 51 percent, according to MS CEO James Gorman.

The decision comes after the Chinese government announced last week that it would be easing foreign ownership rules on financial sector joint ventures.

Wall Street top three indexes ended with moderate gains on Monday, although market sentiment remained on the negative side as uncertainty reigns over the future of Trump’s tax reform.

The Dow Jones industrial average rose 17.49 points to end at 23,439.70, with Boeing among the biggest contributors of gains, while GE was the biggest decliner on the index. Dubai airline Emirates unveiled a provisional order for 40 of Boeing's 787 Dreamliners. The deal is worth $15.1 billion.

The S&P 500 marked a 0.1 percent gain at 2,584.84, with toys company Mattel adding an incredible 20 percent as reports said Hasbro is looking for a deal with the company.

The Nasdaq composite was up 0.2 percent at 6,757.60, with major tech names such as Netflix, Amazon and Facebook pushing upwards, while others like Apple went down.

General Electric, a component of the S&P 500, posted a strong loss of 7.2 percent as the company reported weaker-than-expected guidance for 2018. The management decided that GE will focus on its energy, aviation and healthcare divisions from now on.

Attention in global markets is currently directed to the developments on President Donald Trump’s tax reform bill, which is being analyzed by the Republican Senate.

“I am proud of the Rep. House & Senate for working so hard on cutting taxes {& reform.} We’re getting close! Now, how about ending the unfair & highly unpopular Indiv Mandate in OCare & reducing taxes even further? Cut top rate to 35% w/all of the rest going to middle income cuts?” wrote Trump on Twitter yesterday.

The House of Representatives is going to vote later this week on Trump’s tax reform bill, but there is plenty of uncertainty over the new regulation. The House’s tax-writing committee has recently said that it will now allow an elimination of a federal deduction for state and local taxes.

The numbers are looking pretty tight at the moment. Republicans have a 52-seat majority in the Senate and given the circumstances, two votes seems like a really small margin. Democrats are widely expected to vote against Trump’s proposal.

Ahead in the day, traders will be paying attention to comments from central bank leaders at 10:00 GMT, including ECB President Mario Draghi, Fed Chairwoman Janet Yellen, Bank of England Gov Mark Carney and Bank of Japan Gov Haruhiko Kuroda.

On the data front, Germany’s consumer price index (F: 0.0%) for October and third-quarter gross domestic product (F: 0.6% m/m) are due for release as of 07:00 GMT. At 09:30 GMT, the UK will presents its consumer (F: 0.2%) and producer price (F: 1.1%) indexes for October.

Fort Financial Services