GLOBAL MARKETS-Asian stocks narrow losses as China outperforms GDP forecasts

Finance


Scott Murdoch

SYDNEY (Reuters) – Asian stocks capped their losses on Tuesday as China’s economy posted a better-than-expected recovery from last year’s pandemic-driven lockdown-induced sharp slowdown.

MSCI’s broadest index of non-Japanese Asia-Pacific stocks fell 0.2%, a smaller drop than its 0.4% fall earlier in the session.

China’s economy grew 4.5% year-on-year in the first quarter, beating most economists’ expectations.

Currencies of Australia and New Zealand, whose exports depend on Chinese demand, both rose after the GDP data.

Hong Kong’s Hang Seng index fell 0.4% in early trading on Tuesday, while China’s blue-chip CSI300 index gained 0.3%.

Christopher Wong, currency strategist at OCBC (Singapore), said: “Overall, the very encouraging report of better-than-expected retail sales, gross domestic product (GDP) and real estate sales has weakened the post-pandemic recovery momentum. It reinforces the story that they are not.”

Further data on March activity released on Tuesday also showed retail sales growth beat expectations to a nearly two-year high, while factory output growth also accelerated.

According to a Reuters poll, GDP growth is expected to rebound to 5.4% in 2023 from 3.0% last year, one of the worst performances in nearly half a century due to the pandemic.

The Chinese government has set a target of 5% economic growth this year after failing to meet its 2022 target.

In Asian trade, the benchmark 10-year government bond yield rose to 3.5889% compared to the US closing price of 3.591% on Monday.

The 2-year yield rose to 4.1773% compared to the US closing price of 4.188%, rising on traders’ expectations of Federal Reserve (Fed) interest rate hikes.

Australian shares recovered earlier losses but still fell 0.27%, while Japan’s Nikkei index rose 0.56%.

Australia’s central bank has decided to pause after considering an 11th rate hike in April, but is ready to tighten further if inflation and demand do not cool, the Reserve Bank of Australia said in April. indicated in the minutes of the meeting. On Wall Street, the Dow Jones Industrial Average rose his 0.3%, the S&P 500 rose his 0.33%, and the Nasdaq Composite rose his 0.28%.

“U.S. equity markets were relatively weak while U.S. Treasury yields rose as Fed policy may tighten further,” economists at ANZ wrote on Tuesday.

Two key U.S. business surveys, including the Empire State Survey released on Monday, showed business conditions and sentiment remained strong despite the banking sector crisis and monetary policy tightening.

European stocks closed slightly lower, recording their fifth consecutive gain, while the pan-European STOXX 600 index fell 0.01%.

The index’s winning streak is the longest in three months.

The dollar rose 0.04% against the yen to 134.51, still well off the year’s high of 137.91 in March.

The European single currency was flat today at $1.0929, up 0.77% in a month. Meanwhile, the Dollar Index, which tracks the US dollar against a basket of other major trading partner currencies, fell at 102.06.

US oil prices rose 0.25% to $81.03 a barrel. Brent crude rose to $84.95 per barrel.

Gold was slightly higher, with a spot price of $1997.09 per ounce.

(Reporting by Scott Murdoch, Sydney; Editing by Himani Sarkar and Sam Holmes)



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