Asian stocks gained on Monday after China posted stronger than expected industrial production data in a fragile recovery for the world’s second-largest economy.
Investors also have their eyes on a Bank of Japan decision on Tuesday, with policymakers expected to finally ditch the bank’s negative interest rate.
Shanghai closed up 1.0 percent and Hong Kong added 0.2 percent after Beijing released industrial production and fixed-asset investment figures called “surprisingly spritely” by Harry Murphy Cruise of Moody’s Analytics.
“China’s economy had a stronger start to the year than expected,” he told AFP, but warned that “we should take the latest data with a grain of salt”.
“Today’s prints are inflated by this year’s bigger Lunar New Year celebrations compared to those last year marred by rapidly rising Covid-19 cases,” Cruise said.
China’s industrial production was up 7.0 percent year-on-year in January and February, beating the 6.8 percent rise in December and the 5.2 percent predicted by Bloomberg.
Household consumption was sluggish, reflecting an uneven recovery for the Chinese economy.
“Headwinds still remain: real estate investment continues to be a drag, deflation’s reversal is likely only fleeting and export’s outlook is clouded by geopolitical tensions and still-high global interest rates,” Cruise said.
– Eyes on Bank of Japan –
Taipei rose 1.0 percent, Seoul gained 0.7 percent and Manila added 0.4 percent.
Bangkok, Sydney and Jakarta were also up but Wellington slid 0.3 percent and Singapore was down 0.1 percent.
A slew of central bank policy decisions is due this week, including the US Federal Reserve, the Reserve Bank of Australia, the Bank of England and the Swiss National Bank.
But only one is expected to make a major move — the Bank of Japan, which wraps up its two-day policy meeting on Tuesday.
Tokyo closed 2.7 percent higher on Monday after the influential Nikkei business daily reported that the BoJ plans to raise interest rates for the first time since 2007.
Strong wins for workers in annual pay negotiations have also pointed to the bank ending its outlier negative rate policy designed to boost the flagging economy.
Tom Kenny, senior international economist at ANZ, said that even if it does raise rates, guidance from the BoJ’s governor Kazuo Ueda “is likely to be dovish”.
“He has previously said that policy will remain accommodative after the removal of the (negative interest rate policy) and has ruled out the possibility of successive rate hikes,” Kenny said.
Dampened hopes for Federal Reserve rate cuts led Wall Street to close lower on Friday, and now “all eyes are on whether the Fed will adjust its rate hike outlook for 2024”, said Stephen Innes of SPI Asset Management.
“Uncertainty around this pivotal event may temper market activity in the coming days,” he said.
– Key figures around 0700 GMT –
Tokyo – Nikkei 225: UP 2.7 percent at 39,740.44 (close)
Hong Kong – Hang Seng Index: UP 0.2 percent at 16,760.09
Shanghai – Composite: UP 1.0 percent at 3,084.93 (close)
Dollar/yen: UP at 149.21 yen from 149.08 yen on Friday
Euro/dollar: UP at $1.0896 from $1.0891
Pound/dollar: UP at $1.2740 from $1.2737
Euro/pound: UP at 85.52 pence from 85.48 pence
West Texas Intermediate: UP 0.5 percent at $81.46 per barrel
Brent North Sea Crude: UP 0.4 percent at $85.72 per barrel
New York – Dow: DOWN 0.5 percent at 38,714.77 points (close)
London – FTSE 100: DOWN 0.2 percent at 7,727.42 (close)
kaf/pbt
