Market Talk - Wednesday, May 26

ASIA:

As the trade deal between the U.S. and China runs into its second year, Chinese purchases are still running short of the agreed amount, according to the U.S.-based Peterson Institute for International Economics. The deal stipulated that relative to imports from the U.S. in 2017, China needed to buy at least $200 billion more in U.S. goods and services over the next two years to stay on track with the agreement, China would have needed buy $64.5 billion worth of U.S. goods during the first four months of this year, Peterson Institute senior fellow Chad P. Bown estimated in a report Tuesday, citing Chinese customs data. However, the data showed China’s purchases of U.S. goods reached only 73% of the year-to-date target as of April, the report said. The institute also said the level of progress falls to 60% based on the U.S. data.

Barclays on Tuesday cut its full-year 2021-22 economic growth forecast for India by 80 basis points to 9.2%, saying the toll from stringent lockdowns imposed to curb rising COVID-19 infections appeared to be bigger than its earlier expectation. The brokerage cut its baseline full-year 2021-22 gross domestic product growth forecast, lowering it to 9.2% year-on-year from 10% earlier and 11% before the outbreak of the second wave. Barclays warned that India’s slow vaccination drive might pose medium-term risks to economic growth, especially if the country experienced a third wave of COVID-19 cases.

Japan’s government on Wednesday downgraded its key assessment of Japan’s economy for the first time in three months as consumption was further dampened under the extended state of emergency over the coronavirus pandemic. The Japanese economy shows “further” weakness in some components and remains in a severe situation due to the coronavirus pandemic, the Cabinet Office said in its monthly report for May describing the overall situation for the Japanese economy, but added there are continued signs that it is picking up momentum. The monthly report also downgraded its view on corporate business assessments for the first time in four months, saying they “appear to be pausing” in recovery, while “some severe aspects still remain.” Assessments on other major components were unchanged, with the latest report saying that business investment and industrial production are “picking up.”

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