Asian Markets Weekly Review: India's Sensex Outshines Other Indices

Stock markets across Asia finished the week higher with India's Sensex leading the pack and Hong Kong's Hang Seng trailing.

Asian markets logged strong gains at the beginning of the week after a raft of positive data underlined signs of stability in China and Japan.

In China, government data showed that consumer inflation rose 2.6% on an annual basis in August, in line with expectations. Producer prices dropped 1.6% that month, compared to July's 2.3% fall. In addition, the country's exports increased 7.2% in August, when compared to a year ago.

In Japan, revised gross-domestic-product (GDP) data for the April-June quarter showed that the world's third largest economy grew 0.9%, compared to the preceding quarter. Meanwhile, capital expenditure jumped 1.3% during the second quarter.

Regional stocks rose on 10 September ahead of the release of key China industrial production and retail sales data, and as fears over a US military attack against Syria receded.

Chinese data was expected to show that the world's second-largest economy was rebounding and was on way to achieving the projected economic growth.

In Japan, policymakers said they expected the Shinzo Abe-led government to go ahead with measures aimed at boosting the economy.

Markets also benefited from expectations that the US Federal Reserve would not scale back its monetary stimulus significantly in the near term, given that US jobs data for the month of August had been disappointing.

Markets witnessed mixed trading on 11 September after US President Barack Obama deferred military strikes against the Syrian government.

South and North Korea agreed to reopen a joint industrial park following a five-month closure, in a bid to boost their economies despite a conflict of interests. South Korea's unification ministry said that the operations at the Kaesong industrial zone in North Korea would be restarted after a trial run on 16 September.

Most markets shed early gains as concerns surrounding the timing and size of the US Federal Reserve's planned reduction in monetary stimulus weighed on investor sentiment.

In Japan, core machinery orders remained flat in July when compared to June. Analysts polled by the Nikkei newspaper predicted a 2.4% increase in machinery orders, which fell 2.7% the previous month.

The Bank of Korea left its policy interest rate unchanged at 2.5% and said the Korean economy was improving.

Addressing an international audience at the World Economic Forum in Dalian, Chinese Premier Li Keqiang stated his government remains committed to economic reform.

In Australia, government data released on 11 September showed the country's unemployment rate shot up to a four-year high of 5.8% in August. Australian firms shed 10,800 workers in August, way below expectations of a 10,000 increase.

Most markets traded lower on the final trading day as market participants exercised caution ahead of a key US Federal Reserve meeting, where the central bank could announce a reduction in its massive monthly asset purchases.

India's Prime Minister's Economic Advisory Council (PMEAC) significantly lowered its economic growth forecast for the fiscal year ending in March 2014 amid looming issues such as a widening current account deficit and depreciation in the rupee. The PMEAC slashed its outlook to 5.3% from 6.4% projected in April.

Indian government data released on 12 September showed that industrial production bounced back in July just as consumer inflation eased in August, offering a much needed respite for the government. Industrial output rose 2.6% from a year ago, while retail inflation eased to 9.52% in August from 9.64 in the preceding month.

In Japan, media reports said the government is considering options including a 5tn yen ($50bn, €38bn, £32bn) spending package to cushion the planned sales tax hike.

Market Movements

India's S&P BSE Sensex finished 6.28% higher at 19,732.76.

The Shanghai Composite index finished 3.84% higher at 2,236.22.

South Korea's Kospi finished 1.92% higher at 1,994.32.

The Japanese Nikkei index ended 1.47% higher at 14,404.67.

Australia's S&P/ASX 200 finished 1.32% higher at 5,219.60.

Hong Kong's Hang Seng ended 0.48% higher at 22,915.28.

The Week Ahead

The Fed's FOMC will meet on 17-18 September. Market participants expect the central bank to provide clarity on the timing and size of the planned reduction of its $85bn a month bond-buying stimulus.

China will put out foreign direct investment data for the month of August.

The Japanese government will release merchandise trade balance data for the month of August, alongside Industry Activity Index data for the month of July.

Bank of Japan Governor Haruhiko Kuroda will hold a press conference about monetary policies in Tokyo.

The Reserve Bank of Australia will publish the minutes of its recently held policy meeting.

The Conference Board and Melbourne Institute will both release their surveys on the state of the Australian economy.

New Zealand will release second quarter GDP data.

The Real Estate Institute of New Zealand will put out its house price index data for the month of August.