Asian markets face tough act to follow

NEW YORK, July 31 (Reuters) – Goodbye, July.

Asian stocks could be in for a bumpy start to the week if they expect to outdo robust gains enjoyed the week prior, under the power of potential stimulus in China, Japan’s biggest-ever minimum wage hike, and the flickering optimism that the global economy might avoid recession.

Chinese stocks face the challenge of topping last week’s 4.5% gain in the CSI 300, the index’s biggest weekly jump since November.

The week also saw the Hang Seng and the Nikkei 225 gaining 4.4% and 1.4%, respectively, while MSCI’s index of Asia Pacific shares outside of Japan advanced 2.5%.

Markets were rocked at the tail-end of the week when the Bank of Japan took its first step away from its decades-long monetary stimulus policy, allowing interest rates more freedom to move in harmony with inflation and economic growth.

The move coincided with a decision to implement Japan’s biggest minimum wage hike in history in an effort to jolt the world’s third-largest economy out of the doldrums.

Market participants are also scrutinizing the other side of the Sea of Japan for signs of life in the Chinese economy.

On July 24, Beijing pledged to adjust its policies to jump-start the nation’s lackluster post-COVID recovery, a move which helped solidify the yuan’s near two-week high against the dollar, sending the CSI 300 leaping nearly 3% and the HSI surging 4.1%.

In the coming week in the United States, second-quarter earnings season gallops along, and a spate of high-profile results in the coming days are expected to shed additional light on the global demand picture, particularly as it relates to China.

Megacaps Apple Inc (AAPL) and Amazon.com (AMZN), along with chipmaker Western Digital Corp (WDC), construction and mining equipment manufacturer Caterpillar Inc (CAT), globally ubiquitous coffee chain Starbucks Corp (SBUX), and wireless tech firm Qualcomm Inc (QCOM) are all on deck.

Earnings from Marriott International (MAR), MGM Resorts International (MGM) and Host Hotels & Resorts (HST) will help illuminate the state of global travel and tourism demand.

Potentially market-moving US indicators next week include manufacturing and services PMI. Beyond that, job openings, private payrolls, jobless claims, and planned layoffs will set the stage for the closely watched July employment report on Friday.

Here are key developments that could provide more direction to markets on Monday:

– China’s Caixin manufacturing PMI expected

– Japan to unveil consumer confidence, housing starts, and unemployment data for June

– Australia due to release July manufacturing PMI, June building approvals

– South Korea on deck with July import/export growth report

(Reporting by Stephen Culp; editing by Diane Craft)