Asian Shares Pare Gains As Chinese Data Disappoints

Asian stocks gave up some early gains to end on a mixed note Monday after the latest data out of China showed the gloomy impact of the country’s “zero-COVID” policy.

China’s long-term economic fundamentals remain sound and the continued momentum of economic recovery has not changed, a senior official from the National Bureau of Statistics (NBS) has said.

China’s Shanghai Composite Index slipped 0.3 percent to 3,073.75 after retail sales and industrial production data for April came in far worse than analysts had expected, underlining the deep damage lockdowns were doing to the world’s second-largest economy.

April retail sales plunged an annual 11.1 percent, almost twice the drop forecast, while industrial output dropped 2.9 percent contrary to expectations for a slight increase.

Hong Kong’s Hang Seng Index finished 0.3 percent higher at 19,950.21 after China’s central bank refrained from cutting rates but lowered the mortgage rate for first home buyers. Sentiment was also helped by reports suggesting that Shanghai was relaxing some of its lockdown restrictions.

Japan’s Nikkei 225 Index rose 0.5 percent to 26,547.05 as a weak yen offered some support to exporters. The index ended off the day’s highs as investors pondered the risks from China’s slowdown and longer tightening cycles.

Precision parts maker NTN Corp topped the gainers list to climb as much as 11.7 percent while nonferrous metals manufacturer Dowa Holdings fell more than 13 percent.

In economic news, producer prices surged an annual 10.0 percent in April, the Bank of Japan said earlier today – topping forecasts for 9.4 percent and up from the upwardly revised 9.7 percent increase in the previous month.

Seoul stocks reversed course to end slightly lower as U.S. equity futures declined ahead of a big earnings week for retailers. BOK Governor’s comments on the magnitude of interest rate increases also weighed on sentiment. The Kospi dropped 0.3 percent to 2,596.58.

National flag carrier Korean Air Lines, top carmaker Hyundai Motor and chipmaker SK Hynix gave up 1-2 percent.

Australian markets eked out modest gains as banks rose on expectations that they will benefit from higher interest rates. The benchmark S&P/ASX 200 Index rose 0.3 percent to 7,093. The big four banks gained between 0.6 percent and 1.6 percent.

Brambles soared 11.2 percent after the logistics services firm confirmed it is in discussions with European private-equity giant CVC Capital about a potential takeover offer.

New Zealand shares surrendered early gains, with the benchmark NZX-50 index finishing marginally lower at 11,157.66 after a survey showed the services sector in the country expanded at a slightly slower rate in April.

U.S. stocks posted strong gains on Friday after a week of steep losses on concerns about elevated inflationary pressures and aggressive monetary policy tightening.

The S&P 500 surged 2.4 percent, marking its best day since May 4 and preventing it from tumbling into bear market territory.

The tech-heavy Nasdaq Composite surged as much as 3.8 percent to post its strongest single-day gain since November 2020 while the Dow added 1.5 percent.

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