An Asian stocks rally was derailed on Tuesday by poor Chinese data pointing to a slowdown in the recovery of the world’s No2 economy.
The pullback came after customs data emerged showing China’s exports in the January-February period fell from a year earlier. Imports also decreased at a faster rate, reflecting a slowdown in the global economy and weak domestic demand.
And sentiment took another blow from higher US yields amid fears the Federal Reserve will keep raising interest rates to combat sticky inflation.
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But Japan’s Nikkei bucked the trend, climbing to a three-month peak while the broader Topix index rose to its highest since late 2021.
Still, uncertainty ahead of Federal Reserve Chair Jerome Powell’s Congressional testimony later in the day, a crucial US jobs report on Friday, and Bank of Japan Governor Haruhiko Kuroda’s final interest rate decision before retirement this week capped those gains.
The Nikkei ended 0.25% higher at 28,309.16, after touching a high of 28,398.27 earlier in the session, a level last seen on December 1. The broader Topix added 0.42% to close at 2,044.98, after hitting 2,046.11, its highest level since November 2021.
China and Hong Kong stocks fell, weighed down by China trade data that pointed to sluggish domestic demand and undercut expectations for an economic rebound.
China’s blue-chip CSI 300 closed down 1.5%, while the Shanghai Composite Index lost 1.11%, or 36.93 points, to end at 3,285.10
Hong Kong’s Hang Seng Index slid 0.33%, or 68.71 points, to 20,534.48, and the China Enterprises Index dropped 0.4%.
China and Hong Kong energy indexes soared, though, tracking rising global oil prices after industry executives flagged concerns over oil supplies while demand from China increases as the economy recovers.
The CSI Energy index was up 1.4%, with CNOOC rising 5.9%, China Petroleum & Chemical 3.1% and PetroChina 2.4%. Similarly in Hong Kong market, energy shares gained 3.2%.
Elsewhere across the region, Sydney, Singapore, Seoul, Bangkok, Taipei, Wellington and Manila all rose.
But MSCI’s broadest index of Asia-Pacific shares outside Japan lost 0.4%, unwinding some of the 2.1% gain in the previous session – the index’s best day in two months.
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S&P 500 futures fell 0.5% and Nasdaq futures were off 0.6%, pressured by a 5.5% drop in Tesla shares in after-hour trading. The company will cut vehicle assembly costs by half in future generations of cars, but Chief Executive Elon Musk did not unveil a much-awaited small, affordable electric vehicle.
Overnight, both bonds and shares took a battering, as inflation indicators from Germany and the United States reinforced expectations interest rates would go higher and stay there for longer. Germany’s two-year government bond yield rose to its highest since October 2008.
In the United States, manufacturing activity contracted for a fourth straight month in February, but a gauge of prices for raw materials increased last month, stoking concerns that inflation would remain stubborn.
Benchmark 10-year Treasury yields hit a fresh four-month high of 4.028%, while two-year yields also advanced to 4.9310%, a fresh 15-year high.
Investors still mostly foresee the Fed raising rates by 25 basis points at its next meeting later this month, but expectations of a larger 50 basis points hike have increased.
In currency markets, the US dollar index, measuring the greenback’s value against a basket of major peers, gained 0.2% to 104.62.
In the crypto world, shares in Silvergate Capital plunged by as much as 28% after the cryptocurrency-focused bank said it was delaying its annual report and was evaluating its ability to operate as a going concern.
Oil prices were largely steady, having risen by 1% the previous day due to optimism over China’s recovery. US crude held at $77.72 a barrel. Brent crude was largely unchanged at $84.38 per barrel.
Key figures
Tokyo – Nikkei 225 > UP 0.25% at 28,309.16 (close)
Hong Kong – Hang Seng Index < DOWN 0.33% at 20,534.48 (close)
Shanghai – Composite < DOWN 1.11% at 3,285.10 (close)
London – FTSE 100 > UP 0.16% at 7,942.70 (0936 GMT)
New York – Dow > UP 0.12% at 33,431.44 (Monday close)
- Reuters with additional editing by Sean O’Meara
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