In This Article:
* Asian stock markets : https://tmsnrt.rs/2zpUAr4
* Nikkei up 0.3%, S&P 500 futures slip 0.4%
* Dollar extends skid on yen as shorts squeezed
* China PMI disappoints ahead of data-packed week
* Asia wonders if Wall St can sustain its rally
* UK, Australian central banks expected to hike this week
By Wayne Cole
SYDNEY, Aug 1 (Reuters) - Asian shares were sluggish on Monday as disappointing Chinese economic data fed doubts Wall Street's rally could be sustained, while the dollar continued its retreat on the yen as speculators were forced out of suddenly unprofitable short positions.
China's official measure of factory activity contracted in July as fresh virus flare-ups weighed on demand, and the Caixin PMI also missed forecasts.
South Korean activity weakened for the first time in two years, while Japan expanded at the slowest pace in 10 months.
That did not bode well for the raft of other PMIs due this week, including the influential U.S. ISM survey, while the July payrolls report on Friday should also show a further slowdown.
At the same time U.S. data out Friday showed stubbornly high inflation and wages growth, while central banks in the UK, Australia and India are all expected to hike again this week.
"We expect the Band of England to step up monetary tightening with a 50bp hike at its August meeting. The increase in energy prices is likely to be the main driver," warned analysts at Barclays.
"Central banks focus on the still strong inflation momentum and tight labour markets rather than signals of slowing growth. This could upset markets' recent 'bad news is good news' view."
The caution was evident as MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.2%.
Chinese blue chips were flat, while Japan's Nikkei eked out a gain of 0.4% and South Korea 0.3%. S&P 500 futures and Nasdaq futures both eased 0.3%. EUROSTOXX 50 futures added 0.1%, while FTSE futures fell by the same amount.
While U.S. corporate earnings have mostly beaten lowered forecasts, analysts at BofA cautioned that only 60% of the consumer discretionary sector had reported and it was under the most pressure given inflation concerns for consumers.
"Our bull market signposts also indicate it's premature to call a bottom: historical market bottoms were accompanied by over 80% of these indicators being triggered vs just 30% currently," BofA said in a note.
"Moreover, bear markets always ended after the Federal Reserve cut, which likely is at least six months away - BofA house view is for a first cut in 3Q23."