Asia report: Stocks mixed after disappointing data from China

Stocks were mixed in Asia on Monday, with fresh data out of China missing expectations for April as the country’s ‘zero-Covid’ policy pummelled its economic activity.

In Japan, the Nikkei 225 was ip 0.45% at 26,547.05, as the yen weakened 0.09% against the dollar to last trade at JPY 129.34.

It was a positive day for the benchmark’s major components, with automation specialist Fanuc up 0.86%, fashion firm Fast Retailing rising 1.79%, and technology conglomerate SoftBank Group ahead 1.39%.

The broader Topix index slipped 0.05% by the end of trading in Tokyo, settling at 1,863.26.

On the mainland, the Shanghai Composite was down 0.34% at 3,073.75, and the smaller, technology-heavy Shenzhen Composite was 0.28% lower at 1,926.01.

Data released earlier showed retail sales in China falling 11.1% year-on-year in April, which was much higher than the 6.1% drop pencilled in by economists in a Reuters poll.

Industrial production, meanwhile, was 2.9% lower than the same period last year, going against Reuters-polled forecasts for a 0.4% improvement.

The labour market was also in focus, as unemployment in China’s 31 largest cities jumped to 6.7%, making for the highest level since at least 2018.

China has been grappling with its worst outbreak of Covid-19 since the outbreak of the virus in early 2020, with authorities trying to continue their longstanding ‘zero-Covid’ policy of strict lockdowns and restrictions even in the face of the more transmissible variants currently circulating.

“China’s zero-Covid policies make infrastructure projects hard to carry out - workers and raw materials cannot travel to the sites, thanks either to stay-at-home orders, or restrictions on movement within and across provinces,” said Craig Botham at Pantheon Macroeconomics.

“Factory closures also hit the production of key ingredients, as we saw above.

“As restrictions are eased - a process very tentatively underway at the moment - infrastructure investment should rebound, given the funds resting in local government bank accounts.”

South Korea’s Kospi was 0.29% weaker at 2,596.58, while the Hang Seng Index in Hong Kong managed gains of 0.26% to 19,950.21.

The blue-chip technology stocks were on the back foot in Seoul, with Samsung Electronics down 0.3% and SK Hynix sliding 1.78%.

Oil prices were lower at the end of the Asian day, with Brent crude futures last down 0.5% on ICE at $110.99 per barrel, and the West Texas Intermediate quote on NYMEX falling 0.35% to $110.10.

In Australia, the S&P/ASX 200 was 0.25% firmer at 7,093.00, while across the Tasman Sea, New Zealand’s S&P/NZX 50 was off 0.09% at 11,157.66.

The down under dollars were both weaker against the greenback, with the Aussie last off 0.44% at AUD 1.4475, and the Kiwi retreating 0.31% to NZD 1.5953.

Reporting by Josh White at Sharecast.com.