HONG KONG: China’s markets were the star performers in Asia as data showed its traditional growth drivers were firing on all cylinders – but Japanese markets tumbled after the government expanded a coronavirus state of emergency with the nation battling a fourth wave of Covid infections.
Australia’s S&P ASX 200 edged up 0.13%, Hong Kong’s Hang Seng index added 0.59% but China’s CSI300 jumped 1.46% after. But Japan’s Nikkei 225 index underperformed tumbling 0.92% as the state of emergency was extended to three more prefectures where daily coronavirus cases have been surging. The overall impact was an offsetting one with the regional MSCI Asia Pacific index flat in late trade.
China’s economic activity grew at a slower pace in April as retail sales missed expectations but traditional growth drivers, exports and fixed asset investments, showed a positive picture.
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“China’s economy shows signs of unbalanced recovery – strong exports and domestic investment on one hand, but weak consumption on the other,” said Zhiwei Zhang, Chief Economist at Pinpoint Asset Management.
“The government may put the monetary policy tightening on hold for now and observe the pace of recovery. The probability of a rate hike by PBoC has declined.”
Although China’s industrial production and fixed asset investments expanded from a year ago, the pace of growth slowed. April’s factory output was up 9.8% from a year earlier, slower than March’s 14.1% pace, while fixed-asset investment eased to an expansion of 19.9% in the January-April period from 25.6% in the first quarter.
Retail sales, a key gauge of China’s domestic consumption, underwhelmed: April’s figure was up 17.7% from the pandemic-hit level a year earlier, well short of March’s 34.2% pace.
HAVEN BIDS
The dollar eased against a basket of currencies falling 0.1% to 90.21 and gold was 0.3% higher at $1,850 per ounce as it caught the haven bids.
US Treasuries were flat awaiting the next signal from a host of Fed officials who are due to speak during this data-light week.
Fed vice-chairman Richard Clarida and Atlanta Fed president Raphael Bostic are among policy makers speaking this week while the US central bank will publish minutes from its April meeting on Wednesday. It is expected to provide clues to officials’ views on the recovery and how they define “transitory” when it comes to inflation.
Asia Stocks
- Japan’s Nikkei 225 index tumbled 0.92%
- Australia’s S&P ASX 200 edged up 0.13%
- Hong Kong’s Hang Seng index added 0.59%
- China’s CSI300 jumped 1.46%
- The MSCI Asia Pacific index was flat
Stock of the day
Shares of Tencent and Alibaba both rose amid signs the two tech giants were working together in a shift away from exclusionary platforms long at the heart of their business strategies. For example, most Alibaba-affiliated services do not take payments through Tencent’s WeChat messaging app. Meanwhile, Tencent blocks most Alibaba services from WeChat mini-programs.
The companies are now working together on certain services and WeChat began offering a mini-program for Alibaba’s delivery app.
Tencent rose 3.7% and Alibaba added 2.1%.
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