Chinese shares hit one-month high on upbeat data, Nikkei sags on Japan GDP
Tuesday, 13 August 2013 00:31
Reuters: Most Asian shares rose on Monday and Chinese stocks surged to a one-month high as investors took heart from last week’s upbeat data from the world’s second-biggest economy, but Japan’s Nikkei fell to a six-week low after softer second-quarter GDP.
European shares were expected to open firmer, with Britain’s FTSE 100 seen up as much as 0.3% and Germany’s DAX up as much as 0.1%, according to financial spreadbetters. US stock futures were flat.
China’s CSI300 climbed 2.1%, extending last Friday’s rise after factory output grew in July at its fastest pace since the start of the year.
Data released after the market close on Friday was equally positive, showing Chinese new bank loans and money supply for July came in higher than expected despite a fall in a broad measure of liquidity.
“Apart from the government announcement supporting the environmental protection sector, the latest batch of economic data is lifting some pressure on traditional cyclical sectors,” said a Shanghai-based dealer with a major Chinese brokerage.
Worries about slowing growth in China and uncertainty on when the US Federal Reserve would start to trim back its massive stimulus have roiled markets in recent months. Last week’s Chinese data raised hopes that growth in Asia’s economic powerhouse may be stabilising.
The strong gains in Chinese stocks buoyed Asian shares, with the MSCI Asia-Pacific ex-Japan index index up 1% to a two-week high.Japan’ Nikkei share average shed 0.7% to its lowest since 28 June after data showed its economy grew at a slower-than-expected pace in April-June, triggering investors to cut their risk exposure.
But the yen reversed early gains to trade down 0.2% at 96.510 yen to the dollar. Earlier, it had strengthened as much as 0.4% to 95.92 yen to the dollar, not far from a seven-week peak of 95.810 yen touched last week, and hit a six-week high at 127.97 yen to the euro.
Japan, the world’s third-largest economy, grew an annualised 2.6% in the second quarter, a third straight quarter of expansion but slower than a downwardly revised 3.8% rate in the first quarter.
The median forecast was for annualized growth of 3.6%, and so the data may heighten calls to delay a planned sales tax increase given concerns it could prolong Japan’s escape from deflation.
Yields on benchmark 10-year Japanese government bonds, which move opposite to prices, edged down 0.5 basis point to a three-month low of 0.745%.
The yen has fallen 11% against the dollar this year as Prime Minister Shinzo Abe pushed for fiscal and monetary expansionary policies to revive the economy, while the Nikkei is up 30% during the same period.
The dollar added 0.1% against a basket of major currencies on Monday.
Singapore’s economy grew at a better-than-expected pace in the second quarter and the government raised the city state’s outlook for the year on expectations for a gradual pick up in global growth in coming months.
Singapore’s stocks were up 0.2%, underperforming the regional market, however.
US stocks fell on Friday, posting their biggest weekly decline since June as investors focused on when the Fed would begin pull back its stimulus.
In commodities markets, copper prices slipped 0.3% to around $7,250 a ton after climbing 1.3% to a two-month high on Friday on the back of the upbeat Chinese factory data.
They rose 3.9% last week to log their best weekly gain in almost a year.
Gold rose 1.3%, extending a 0.3% rise in the previous session and heading for a fourth straight day of winning streak.
Brent crude prices dipped 0.1% but held above $108 a barrel after they advanced 1.4% on Friday to snap a five-day run of loss – the longest since April.