Asian stocks were pushed back on Tuesday as investor gloom deepened after China posted one of its worst growth figures in decades.
Global equities have enjoyed a rally so far this year, fuelled by hopes of a rebound in China’s economy, after it dropped many of its Covid curbs, and an easing of price pressures in the United States and Europe.
But the Chinese data showed that the world’s second-biggest economy grew 2.9% in the fourth quarter of last year, beating expectations but underscoring the toll exacted by Beijing’s stringent “zero-Covid” policy.
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China’s growth for 2022 of 3% was far below the official target of about 5.5%. Excluding a 2.2% expansion after Covid-19 first hit in 2020, it was the worst showing in nearly half a century.
Asia Pacific shares outside Japan widened losses in response, though China’s benchmark CSI300 Index clawed back early losses to close flat.
The Hang Seng Index dropped 0.78%, or 169.08 points, to 21,577.64.
The Shanghai Composite Index fell 0.10%, or 3.35 points, to 3,224.24, while the Shenzhen Composite Index on China’s second exchange edged down 0.03%, or 0.73 points, to 2,094.26.
The story was a little different in Japan where the Nikkei share average ended higher, rebounding from two straight sessions of heavy losses, as the yen’s relentless rise paused on the eve of a crucial Bank of Japan (BOJ) policy decision.
That took pressure off exporters’ shares, lifting automakers in particular. Chip-related shares and electronic component makers also bounced back.
The Nikkei share average edged up 1.23%, or 316.36 points, to close at 26,138.68, while the broader Topix rose 0.88%, or 16.58 points, to 1,902.89.
The BOJ’s two-day meeting began on Tuesday, following a build-up of speculation that officials could tweak policy settings again, only a month after surprising markets by doubling the allowable range for the 10-year Japanese government bond yield to 50 basis points either side of the 0% policy rate.
The yen surged as high as 127.215 per dollar on Monday but retreated to last trade around 128.
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Indian stocks advanced with Mumbai’s signature Nifty 50 index up 0.89%, or 158.45 points, at 18,053.30.
In Europe, China-exposed financials HSBC and Prudential fell 1% and 0.4% respectively. Economy-sensitive consumer staples such as Unilever and Danone also fell more than 1% each.
Market players said investors were taking stock of how economies would expand as inflation peaks and central bank tightening of monetary policy slows, with the China data underscoring doubts over whether it could act as a spur.
“What will be the thing that reinvigorates growth?” said Gaël Combes, head of fundamental research at Unigestion. “China is probably unlikely to provide the lift it has provided in the past, like during the global financial crisis.”
Wall Street was set to open slightly lower after a public holiday on Monday, with E-mini futures for the S&P 500 down 0.3%.
Euro zone bond yields inched up from month lows hit late last week but trading in bonds globally was cautious ahead of the result of the BOJ meeting.
Across the world, the R-word continues to loom large. Two-thirds of private and public sector chief economists surveyed by the World Economic Forum in Davos expected a global recession this year, with some 18% considering it “extremely likely”.
As equities rallied this year, other riskier assets have also gained. The No1 cryptocurrency bitcoin has clocked a gain of about a quarter in January, leaping over 20% in the past week alone, putting in on course for its best month since October 2021. It was last trading flat at $21,208.
Key figures
Tokyo – Nikkei 225 > UP 1.23% at 26,138.68 (close)
Hong Kong – Hang Seng Index < DOWN 0.78% at 21,577.64 (close)
Shanghai – Composite < DOWN 0.10% at 3,224.24 (close)
London – FTSE 100 < DOWN 0.16% at 7,847.11 (0940 GMT)
New York – Dow < UP 0.33% at 34,302.61 (Friday close)
- Reuters with additional editing by Sean O’Meara
Read more:
China’s 2022 Growth of 3% Among the Worst in 50 Years
China’s Reopening Lifts Economic Growth Optimism: WEF Panel
