Asia: Equities rally as disappointing Chinese trade fuels stimulus hopes

Asian stocks bounced back on Friday as disappointing Chinese trade data fuelled hopes of further stimulus from Beijing.

Chinese exports fell 6.4% year-on-year in April, easing back from the previous month’s 15% drop but missing analysts’ estimates for a 1.6% rise.

Imports plunged 16.2% in April, compared to estimates for a 12.2% dip and the prior month’s 12.7% declined. The trade surplus widened to $34.13bn from $3.08bn, but fell short of the forecast of $39.60bn.

“Trade data from China overnight was pretty horrible with exports and imports plunging again over the year, Asian equities responded well on the prospect for further government stimulus but the data doesn’t bode well for world growth,” said Jasper Lawler, market analyst at CMC Markets.

Hong Kong’s Hang Seng rose 1.05% and Shanghai increased 2.28% as close of trading.

Japan’s Nikkei 225 finished up 0.45% as the yen weakened against the dollar to support exporters.

The Bank of Japan’s minutes of the April 7-8 rate review showed that some policymakers saw the output gap improving but were concerned about the ability to reach target of 2% sustained inflation in the coming year.

"Some members expressed the view that the start of a reduction in the BoJ's paces of asset purchases at this point - when Japan's economy was still on its way to achieving the price stability target of 2% - was likely to constrain the effects of its policy measures," the minutes showed.

"A few members noted that, considering that Japan's economy was at a stage where the path toward overcoming deflation had come in sight at last, the highest priority at this point should be given to avoiding the risk of the economy falling back into deflation."

Investors are now turning to the all-important US non-farm payrolls report due at 13:30 London time.Analysts forecast US employers added 230,000 jobs last month, compared to 126,000 in March, while the unemployment rate is expected to fall to 5.4% from 5.5%.

“This release as always will attract a higher volume in trading and the volatility that it can produce can result in key FX levels being tested and sometimes left for dust,” said Brenda Kelly, head analyst at London Capital Group.

On the company front, Nintendo gained in Tokyo after President Satoru Iwata said the company’s move into mobile gaming will boost annual profit.

China Taiping Insurance jumped in Hong Kong following reports China’s two richest technology moguls took part in its $1.7bn share sale.

Macquarie Group advanced in Sydney after posting a seven-year rise in annual profit.