Asia report: Most markets higher as China exports top forecasts

Markets in Asia were broadly firmer as they closed on Tuesday, as investors digested the latest export data out of China and monitored the regional Covid-19 situation.

In Japan, the Nikkei 225 was up 0.52% at 28,718.24, as the yen strengthened 0.08% against the dollar to last trade at JPY 110.28.

Of the major components on the benchmark index, robotics specialist Fanuc was up 1.96%, Uniqlo owner Fast Retailing rose 0.29%, and technology giant SoftBank Group was ahead 1.26%.

The broader Topix index gained 0.73% by the end of trading in Tokyo, closing at 1,967.64.

On the mainland, the Shanghai Composite was ahead 0.53% at 3,566.52, and the smaller, technology-heavy Shenzhen Composite managed gains of 0.27% to 2,491.97.

Newly-released customs data showed exports from China surging 32.2% year-on-year in June, significantly ahead of the 23.1% improvement pencilled in by analysts polled by Reuters.

Imports, meanwhile, were also well above expectations, rising 36.7% over the prior year in June, against the 30% anticipated by Reuters polling.

Pantheon Macroeconomics chief Asia economist Freya Beamish said the strength of exports was unexpected.

“We had thought that exports would remain constrained by Covid restrictions, which were loosened only toward the end of the month,” she said.

“At the same time, the signal from Korea was on the weaker side.”

Instead, exports rose a solid 4.7% month-on-month in June, Beamish noted, after May’s 2.2% drop.

“Price data are produced with a long lag, but the PMI and PPI both point to a sharp slowdown in price rises, meaning volumes likely were very strong, approximately making up for the sharp drop in May.”

Imports were closer to Pantheon’s expectations, Freya Beamish added, rising just 0.3% month-on-month in June, after the 4.7% leap in May.

“Prices are a large part of the story here, with commodities import rises slowing sharply.

“Still, imports excluding commodities were flat, after a 4.3% rise in May.

“Overall, the pullback in the trade surplus, especially in the first two months of the quarter, probably meant that net trade shaved around 0.2 percentage points off second quarter GDP growth, a sharp reversal from the 0.4 point contribution in the first quarter.”

CMC Markets chief market analyst Michael Hewson, meanwhile, said that the slowdown for imports was not a surprise, given the 51.1% year-on-year rise in May, but he added that some of the rise was down to base effects from the weak numbers last year when the Chinese economy was coming out of a lockdown.

“The rest of the increase was driven by surging commodity prices, as reflation trade concerns drove up demand.”

South Korea’s Kospi was ahead 0.77% at 3,271.38, while the Hang Seng Index in Hong Kong jumped 1.63% to 27,963.41.

The blue-chip technology stocks were on the front foot in Seoul, with Samsung Electronics up 0.13%, and SK Hynix leaping 2.5%.

Oil prices were higher as the region went to bed, with Brent crude last up 0.51% to $75.54 per barrel, and West Texas Intermediate rising 0.5% to $74.44.

In Australia, the S&P/ASX 200 was the region’s odd one out, slipping 0.02% to 7,332.10, while across the Tasman Sea, New Zealand’s S&P/NZX 50 rose 0.17% to 12,784.94.

The down under dollars were in a mixed state against the greenback, with the Aussie last 0.01% stronger at AUD 1.3367, while the Kiwi weakened 0.02% to change hands at NZD 1.4321.