Asia report: Stocks rise despite weaker data from China, Japan

Most stock markets in the Asia-Pacific region were in the green on Tuesday, as investors digested some weaker-than-expected economic data out of both China and Japan.

In Japan, the Nikkei 225 was up 0.1% at 27,990.17, as the yen strengthened 0.61% on the dollar to last trade at JPY 139.03.

Uniqlo owner Fast Retailing was down 0.48%, while robotics specialist Fanuc was up 1.57% and tech investing giant SoftBank Group was 1.3% firmer.

The broader Topix index was ahead 0.37% by the end of trading in Tokyo, settling at 1,964.22.

Data released earlier showed Japan’s economy unexpectedly contracting in the third quarter, according to preliminary estimates.

The country’s gross domestic product (GDP) was down 1.2% year-on-year in the three months through September, which was well below the 1.1% rise anticipated in a Reuters poll.

On the mainland, the Shanghai Composite added 1.64% to 3,134.08, and the technology-centric Shenzhen Component jumped 2.14% to 11,351.33.

Fresh data out of China on its industrial output and retail sales came in below expectations earlier in the session.

Industrial production climbed 5% year-on-year in October, down from the 6.3% growth in September and below the 5.2% economists polled by Reuters were expecting.

Retail sales, meanwhile, contracted 0.5% year-on-year in October, swinging from 2.5% growth in September and coming in well below the 1% rise pencilled in by economists.

“China has been a two-speed economy for much of this year, with domestic demand suppressed by zero-Covid policy and the property sector malaise, while output was cushioned by export demand and stimulus via infrastructure and manufacturing fixed asset investment,” said Duncan Wrigley at Pantheon Macroeconomics.

“October saw a broad slowdown, as even the previous growth drivers weakened.

“Exports fell 0.5% year-on-year - the first decline since May 2020, as global demand ebbed.”

Wrigley said the impact of stimulus should resume in the rest of the year, now that the National Congress was over and officials were back at their desks.

“Taking a longer view, the post-Congress shift in policy on both the property and Covid front begins to tackle the two thorniest issues for China’s economy.

“These are difficult issues that will take a while to resolve, but nonetheless point to a constructive case for a stronger domestic economy in 2023.”

South Korea’s Kospi was 0.23% higher at 2,480.33, while the Hang Seng Index in Hong Kong rocketed 4.11% to 18,343.12.

Chinese technology plays were among the big gains in the special administrative region, with Alibaba Group up 11.05%, Meituan ahead 6.33%, and Tencent Holdings 10.51% higher.

The blue-chip technology stocks were on the front foot in Seoul as well, with Samsung Electronics up 0.81% and SK Hynix rising 0.77%.

Oil prices were weaker as the region went to bed, with Brent crude futures last down 0.39% on ICE at $92.78 per barrel, and the NYMEX quote for West Texas Intermediate losing 0.56% to $85.39.

In Australia, the S&P/ASX 200 was the region’s odd one out, slipping 0.07% to 7,141.60, after the country’s central bank implicitly referred to bigger interest rate rises on the horizon in the minutes from its most recent meeting.

The Reserve Bank of Australia revealed that it had considered a 50-basis point rise in its last decision, before settling on the 25-basis point hike to the current 2.85%.

“The board agreed on the importance of returning inflation to target and expects to increase interest rates further over the period ahead,” the RBA said in its minutes.

Ratesetters agreed that higher interest rates would play a part in setting “a more sustainable balance of demand and supply in the Australian economy”.

Across the Tasman Sea, New Zealand’s S&P/NZX 50 managed gains of 0.06% to 11,239.14, with property stocks dragging on Wellington’s bourse by the close.

Investore Property was down 1.3%, Kiwi Property Group lost 2.8%, and PGG Wrightson was 1.4% weaker.

Both of the down under dollars were stronger on the greenback, with the Aussie last ahead 0.9% at AUD 1.4787, and the Kiwi advancing 1.06% to NZD 1.6231.

Reporting by Josh White for Sharecast.com.