The intensifying trade war between Washington and Beijing weakened factory activity and export orders weakening across Asia last month. In a sign conditions for exporters and factories were deteriorating, manufacturing surveys showed marginal growth in China, a slowdown in South Korea and Indonesia and a contraction in activity in Malaysia and Taiwan.
These figures follow weaker-than-expected industrial production data from Japan and South Korea, with output in the latter shrinking the most in over 1-1/2 years. By contrast, the US ISM manufacturing survey for October was expected to show a much faster growth pace than in Asia, albeit a tad slower than in September, supporting the outlook for further Federal Reserve Rate hikes.
Worryingly, the prospects for higher US rates could feed back more market pain for the region's externally vulnerable economies — Indonesia, India and the Philippines, which have already been forced to raise rates to mitigate a sell-off in currencies, stocks and bonds.
