Daily FNArena News - International

Asian equity markets have rallied in recent weeks but experts question the sustainability of the move given the earnings outlook is worsening.

The Japanese economy grew at a slower than expected pace in the June quarter, though economists suggest there were enough positives in the result to maintain a positive outlook.

Experts are now expecting further interest rate increases in Japan before the end of the year, as there continue to be signs the economy is experiencing price pressures.

US rates may have peaked but with US growth looking set to slow further, the outlook for Asian equity markets remains mixed.

Earnings results and guidance from Japanese companies has been above expectations for first quarter earnings, which historically has been a key driver of full year performance for the index.

Don’t expect any quick policy shifts, but China seems to be looking for a Plan B.

Danske Bank suggests there remains upside generally to Asian currencies, but the likely winners and losers are split by the policy decisions of their respective governments.

Average land prices in Japan have risen for the first time in 14 years, which could add to the pressure for further increases in interest rates.

CLSA’s July survey of Chinese manufacturing shows a sector enjoying buoyant times, and passing on higher input costs. Expect tougher measurements by the authorities.

DBS suggests the pressure to revalue the renminbi is coming not just from strong domestic growth, with the US likely to again step up its push to have the exchange rate adjusted.