Equity market performances were subdued over the week ended December 1, 2017, with the MSCI AC World Index falling a slight 0.55 per cent.
Amid optimism over tax reform and positive economic data, the US equity market, as represented by the S&P 500 Index, rose 0.95 per cent over last week and was the best weekly performer amongst markets under our coverage.
Meanwhile, Japan’s Nikkei 225 Index gained a smaller 0.21 per cent and Europe’s Stoxx 600 Index dipped 1.44 per cent over the week.
The returns of Emerging and Asian equity markets fell back into the red last week, with the MSCI Emerging Market Index and MSCI Asia ex Japan Index declining 3.87 and 3.91 per cent respectively over the week.
In East Asia, China’s onshore CSI300 Index and Shanghai Composite Index extended their losses from the prior week with a 3.12and 1.63 per cent decline, while the offshore HSML 100 Index fell a greater 4.37 per cent.
Hong Kong’s, Taiwan’s and Korea’s equity indices as represented by the HSI Index (3.27 per cent weekly loss), TWSE Index (2.98 per cent weekly loss) and KOSPI Index (3.24 per cent weekly loss) too were met with losses.
In Southeast Asia, equity market performances were mixed, with Malaysia’s KLCI Index seeing weekly gains of 0.04 per cent.
Meanwhile, Thailand’s SET Index, Singapore’s STI and Indonesia’s JCI index lagged with 0.21, 0.39 and 2.67 per cent respectively.
In other emerging markets, losses over the week ended December 1, 2017 had replaced gains seen the week before.
India’s SENSEX Index, Russia’s RTSI$ Index and Brazil’s Bovespa Index, saw losses of 3.06, 3.37 and four per cent respectively over the week.
The prices of the WTI crude oil dipped 1.57 per cent over the week to US$58.36 per barrel, contributing to the weaker performance of markets dependent on the energy industry.
Japan: October’s consumer price inflation in line with expectations
For the month of October, Japan’s consumer prices rose a slight 0.2 per cent year-on-year, down from prior month’s 0.7 per cent but was on par with expectations.
The slowdown was largely due to higher fresh food prices over the same period the year before.
Excluding the prices of fresh food, consumer prices rose 0.8 per cent year-on-year, up from prior month’s 0.7 per cent increase, in part due to higher energy prices. Japan’s inflation has generally remained at levels above that seen in 2016, with the improvement in CPI being more apparent when excluding the prices of fresh food.
Nonetheless, consumer price inflation continues to be significantly lower than the central bank target of two per cent.
Through 2017, Japan’s labour market has continued to tighten, with unemployment rate falling to recent history lows while retail sales have improved from their levels in 2016.
Over the coming quarters, it would be unsurprising that a continued gradual increase in inflation be witnessed.
China: November’s manufacturing PMI moderates but remains in expansionary territory
For the month of November, the China’s Caixin manufacturing PMI came in at 50.8, down slightly from prior month’s 51 reading and had just missed expectations of a 50.9 reading.
Nonetheless, November was the sixth consecutive month for which the Caixin PMI had come in above the neutral 50 reading, signalling underlying resilience in the nation’s manufacturing sector.
An increase in the purchases of raw materials, albeit marginally, was also witnessed, thus signalling further growth in manufacturing activity. While the rate of manufacturing expansion has moderated in the recent months, the official manufacturing PMI reading has picked up unexpectedly.
With industrial profits also remaining strong, it remains likely that both manufacturing expansion, as well as domestic economic momentum, remain supported over the coming quarters.
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