Asia report: Markets rise on back of robust China data

(Sharecast News) - Japan's benchmark index spearheaded robust gains across the Asia-Pacific markets on Monday, bolstered by positive economic indicators and anticipation ahead of key central bank meetings. China also sustained its upward trajectory, propelled by encouraging data indicating a strong start to the year for its economy.

Investor sentiment in the region was focussed on the upcoming US Federal Reserve, Bank of Japan and Reserve Bank of Australia meetings.

Expectations were for the Fed to maintain its benchmark interest rates, while the BoJ was anticipated to exit its negative interest rate policy, potentially lifting its benchmark rate to 0% from -0.1%.

"Asian stock markets are experiencing a mix of trading on Monday, following the generally negative trends from Wall Street on Friday," said TickMill market analyst Patrick Munnelly.

"Traders appear hesitant to make significant moves and are looking ahead to the US central bank's upcoming monetary policy meeting.

"While it is widely anticipated that the US Fed will maintain interest rates at their current level, traders will be paying close attention to the accompanying statement for any indications about the future of interest rates."

Munnelly noted that recent higher-than-expected inflation readings dampened optimism that the Fed could cut rates in June.

"According to the CME Group's FedWatch tool, the likelihood of the Fed keeping rates unchanged at its June meeting has risen to 43.3% from 25%.

"In spite of subdued machinery orders, the Nikkei 225 demonstrated strong performance, fueled by widespread expectations of a policy adjustment at the upcoming BoJ announcement.

"The index's upward trajectory was reinforced by currency depreciation and declining yields."

Markets in the green across the Asia-Pacific region

In Japan, the Nikkei 225 jumped 2.67%, closing at 39,740.44, with the broader Topix index following suit, up by 1.92% at 2,721.99.

Leading the charge on Tokyo's benchmark was Rakuten, up 7.43%, followed by Nidec with a 6.02% rise, and Lasertec, which added 6.01%.

In China, the Shanghai Composite rose by 0.99% to 3,084.93, while the Shenzhen Component climbed by 1.46% to 9,752.83.

Cultural Investment Holdings and China Hainan Rubber Industry Group were among the leading performers in Shanghai, gaining 10.21% and 10.1%, respectively.

Hong Kong's Hang Seng Index recorded a modest increase of 0.1%, closing at 16,737.12, led higher by JD Health International, up 6.62%; China Resources Beer Holdings, ahead 4.55%; and Alibaba Health Information Technology, which rose 4.46%.

South Korea's Kospi index edged up by 0.71% to 2,685.84, with notable performances from Hanwha Ocean and SKC, which finished 7.78% and 6.19% higher, respectively.

Australia's S&P/ASX 200 saw a marginal uptick of 0.07% to 7,675.80, with Mercury NZ rising 6.33% in Sydney, and Tabcorp 4.83% firmer.

However, New Zealand's S&P/NZX 50 experienced a slight decline of 0.33%, closing at 11,728.01, with Heartland Group and Vector among the biggest losers, closing down a respective 4.88% and 3.06%.

In currency markets, the dollar was last 0.09% stronger on the yen to trade at JPY 149.17, while it weakened -0.1% against the Aussie and retreated 0.11% from the Kiwi, changing hands at AUD 1.5229 and NZD 1.6416 respectively.

On the oil front, Brent crude futures were last up 0.79% on ICE at $86.01 per barrel, and the NYMEX quote for West Texas Intermediate climbed 0.94% to $81.80.

Strong economic data buoys China sentiment

In economic news, China started the year on a high note as it reported robust economic figures for the first two months of 2024, surpassing market expectations.

Retail sales surged by 5.5% and industrial production showed growth of 7%, defying analysts' projections.

The urban unemployment rate for February stood at 5.3%, maintaining stability in the labour market.

Despite a 9% year-on-year decline in real estate investment, manufacturing saw a significant uptick of 9.4% during the same period.

China combines data for January and February to mitigate disruptions caused by the Lunar New Year holiday, ensuring a smoother representation of economic trends.

Elsewhere, Singapore's non-oil domestic exports (NODX) experienced a setback, declining by 0.1% year-on-year in February, according to official statistics.

The drop came as a surprise against Reuters' poll expectations, which anticipated a 4.7% increase.

It was primarily attributed to non-electronics sectors such as food preparations, specialty chemicals, and electrical circuit apparatus, while electronics exports saw growth.

The reading followed a 16.7% surge in January, indicating a mixed performance in Singapore's export sector.

Meanwhile, Malaysia faced a divergence in its trade performance as exports fell by 0.8% year-on-year in February, contrary to a Reuters poll forecast of a 2.4% rise.

However, imports grew 8.4%, beating market estimates of a 7.8% increase.

As a result, Malaysia's trade surplus narrowed to MYR 10.9bn (£1.81bn) in February, down 44.4% year-on-year.

Reporting by Josh White for Sharecast.com.