Asia set to trade mixed ahead of U.S. vote on debt ceiling deal; Hong Kong set for new lows
Debt Ceiling Agreement Reached by Biden and Congressional Leaders
President Joe Biden and Congressional leaders reached an initial agreement over the weekend to avoid a U.S. default, with the bill set for a vote as soon as this week. House Majority Speaker Kevin McCarthy and Biden had been at odds for weeks over raising the debt ceiling, with the first inklings of real progress coming last week. Key provisions that necessitated compromise included keeping non-defense spending flat for the next two years as well as increasing work requirements of food stamp benefits. Still, the bill will need both Republican and Democratic support to make it to President Biden’s desk before the so-called “X date” on June 5, which is the earliest time the Treasury Department has signaled the U.S. could default.
Upcoming Economic Reports Set to Impact Asian Markets
This week, China’s purchasing managers’ index readings for May, along with the Bank of Thailand’s meeting, and South Korea’s inflation and gross domestic product reports will be in focus. On Monday, Hong Kong’s trade data for April will be published after the region saw a contraction of 0.6% in imports and a contraction of 1.5% in exports in March. Japan’s unemployment rate for April will be released, as well as Australia’s building approvals for the same month on Tuesday. Thailand’s industrial production for April will also be released.
China’s National Bureau of Statistics will publish the economy’s purchasing managers index for May. Economists surveyed by Reuters expect the reading to remain under the 50-mark that separates contraction and growth at 49.4, after April’s reading of 49.2. The Bank of Thailand is set to announce its rate decision on the same day. South Korea’s industrial production for April on Wednesday is expected to show a further decline of 7.9% in April, according to economists surveyed by Reuters. Retail sales for South Korea and Japan are also scheduled to be released on the same day. India will release its gross domestic product for the third quarter of the year. South Korea will also publish its latest trade figures alongside Australia’s retail sales.
Indonesia markets will be closed on Thursday and Friday, while Singapore will observe a market holiday on June 2. South Korea’s gross domestic product and its latest inflation readings will be released on Friday.
FAQs:
1. What is the debt ceiling agreement reached by President Joe Biden and Congressional leaders?
Answer: The initial agreement aims to avoid a U.S. default and the bill will be set for a vote as soon as this week. The key provisions that require compromise include keeping non-defense spending flat for the next two years and increasing work requirements of food stamp benefits.
2. When is the earliest time that the Treasury Department has signaled that the U.S. could default?
Answer: The so-called “X date” is on June 5, which is the deadline for the bill to reach President Biden’s desk.
3. What economic reports are set to impact Asian markets this week?
Answer: China’s purchasing managers’ index readings for May, Bank of Thailand’s meeting, and South Korea’s inflation and gross domestic product reports will be in focus. Hong Kong’s trade data, Japan’s unemployment rate, and Australia’s building approvals will also be released.
4. When will South Korea’s gross domestic product and inflation readings be released?
Answer: They will be released on Friday alongside Indonesia’s market closure and Singapore’s market holiday.
“Asia Braces for Mixed Trading as US Vote on Debt Ceiling Deal Looms; Hong Kong Expected to Reach Fresh Lows”
President Joe Biden and Congressional leaders have struck a preliminary deal to avoid a U.S. default, with a bill set for a vote as early as this week. The negotiations had been a contentious issue between House Majority Speaker Kevin McCarthy and Biden for weeks, with progress gaining traction only last week. Key provisions that required compromise included keeping non-defense spending stable for two years while also increasing work requirements for food stamp benefits. The bill will need bipartisan support to reach President Biden’s desk before the “X date” of June 5, the earliest time the Treasury Department has signaled the U.S. could default.
This week’s focus shifts to Asia with China’s purchasing managers’ index readings for May, Bank of Thailand meetings, and South Korea’s inflation and gross domestic product reports set to be published. On Monday, Hong Kong’s trade data for April will be released after shrinking 0.6% in imports and 1.5% in exports in March. Tuesday will see Japan’s unemployment rate for April and Australia’s building approvals released. Thailand’s April industrial production data will also be revealed. China’s National Bureau of Statistics will publish the economy’s purchasing managers index for May, with experts predicting a reading of 49.4 after April’s 49.2. South Korea’s industrial production for April is also expected to decline by 7.9%, according to economists surveyed by Reuters. Additionally, Indonesia markets will be closed on Thursday and Friday, and Singapore will observe a market holiday on June 2. South Korea’s gross domestic product and latest inflation readings will be released on Friday.