Asian Markets Retreat Ahead of Australian Rate Decision; Inflation, expected business data

Service sector activity in Japan expanded at the fastest pace since May, according to a special survey by Bank au Jibun.

The country’s services purchasing managers’ index came in at 54.3 in August, unchanged from the preliminary estimate released in late August and higher than 53.8 in July.

The bank indicated that the faster rise in new business was a major factor driving the growth of business activity upwards, adding that companies indicated an increase in consumer spending and customer numbers.

The bank added that while service providers in Japan saw a faster increase in operating expenses, “companies remain very optimistic that activity will pick up over the next 12 months.”

– Lim Hwi Ji

Private sector activity in Hong Kong contracted for the second consecutive month in August, albeit at a slower pace than in July.

According to a special survey by S&P Global, the city’s global PMI came to 49.8, compared to 49.4 in July.

A PMI reading above 50 indicates expansion in the sector, while a reading below 50 indicates contraction.

S&P Global said this was due to weak underlying demand, dragged down by softening economic conditions. However, this was slightly offset by a slight increase in exports in August.

– Lim Hwi Ji

The Monetary Authority of Singapore announced late Monday that Xia Der Jeon will be its next Managing Director from January 1st. She currently holds the position of Permanent Secretary in the Singapore Ministry of Manpower.

Shea succeeds Ravi Menon who will retire from public service and step down from his MAS roles on December 31st.

The Singapore central bank did not provide further details on the reasons for Menon’s retirement. In May he was reappointed for another two years.

Christine Wang

South Korea’s CPI rose 3.4% year-on-year in August, the first recorded rise in inflation since January.

The number was sharply higher than the 2.3% gain in July and also higher than the 2.7% expected by economists polled by Reuters.

CPI also rose 1% m/m, above expectations of 0.3%.

– Lim Hwi Ji

UBS downgraded two major global automakers due to increasing competition from Chinese electric vehicle makers.

The investment bank has also lowered target prices as it sees mass-market automakers losing market share to Chinese companies like Warren Buffett-backed BYD.

CNBC Pro subscribers can read more here.

– Ganesh Rao

The markets now look very different than they did just a few months ago when stocks were surging.

If you had $50,000 to invest, where should you put it and how much should you allocate to each asset class? CNBC Pro spoke to portfolio managers and other investors to find out.

We also went back to those who told CNBC Pro how they would set aside $50,000 in June to ask what they would change — if anything.

CNBC Pro subscribers can read more here.

– Wizen tan

UBS is sticking to its view of a “soft” landing for the US economy, saying that inflation is close to the Fed’s target without a recession this year.

“August was a tough month for investors,” said Mark Heffel, chief investment officer of Global Wealth Management at UBS, noting that the S&P 500 ended last month down 1.6%. “Contradictory evidence and conflicting interpretations of economic data, asset pricing and the outlook for Fed policy have weighed on asset prices in recent weeks as soft landing expectations for the US economy ebb and flow.”

Some remaining uncertainties may keep the market on alert, Hefeli said in a note on Monday. The analyst said the increase in core personal consumption expenditures last month was well above the Fed’s target, which could support the possibility of another rate hike. UBS is also watching for a possible recovery in savings rates and a further slowdown in the labor market.

“Our fundamental view is that by the time the FOMC meets in November, the economy will show clear signs of slowing down, prompting the Fed to finally put an end to the sharpest rate hike cycle since the 1980s. We expect US Treasury yields to decline by 2018,” he wrote. Hefeli: “It ends with moderating economic growth and inflation in the United States.”

– Piya Singh

Investors are preparing for what history says is the weakest month for the markets.

In September, traders will study new data from economic reports, including the Personal Consumption Expenditure Price Index, which is the Fed’s preferred measure of inflation. Traders are also awaiting the Fed’s two-day meeting in September, during which central bank policymakers will announce their interest rate decision on September 20th.

CNBC Pro subscribers can read more here about what to expect next week.

– Piya Singh, Sarah Maine