Asia stocks steady despite China data miss, helped by weaker dollar outlook

HONG KONG : Asia stocks mostly held firm on Tuesday despite weaker-than-expected Chinese economic data, with investors expecting the world’s second-biggest economy to provide policy support.

Expectations that the dollar will soften also cushioned emerging markets, although investors were wary of crucial U.S. government debt-ceiling negotiations, with a little more than two weeks to go before the government could run short of money to pay its bills.

Japan’s broad Topix gained 0.48 per cent to 2,124.92, its highest since August 1990, helped by the robust outlook of its megabanks.

China’s industrial output grew 5.6 per cent in April from a year earlier, accelerating from the 3.9 per cent pace seen in March and marking the quickest growth since September 2022, data showed on Tuesday. But it was well below expectations for a 10.9 per cent increase in a Reuters poll of analysts.

Retail sales also missed expectations, and, coming against a backdrop of China’s weak industrial, credit growth and import indicators, highlighted a wobbly post-COVID recovery.

With the softer readings, the market expects the policy response to try and shore up the economy and ensure that corporate confidence is back and growth is more sustainable, said Kerry Craig, a global market strategist with JPMorgan.

MSCI’s broadest index of Asia-Pacific shares outside Japan edged 0.3 per cent higher.

“The market is thinking that the Fed is done and the U.S. dollar is going to come down a little bit so that supports the markets in Asia,” Craig said.

China’s benchmark stock index dropped 0.29 per cent. But Hong Kong’s Hang Seng index extended its rally of the previous day, opening 0.53 per cent higher, with the tech gauge climbing 1.19 per cent.

Japan’s benchmark Nikkei opened up 0.71 per cent at 29,838.01.

Australia’s S&P/ASX 200 index, however, lost 0.14 per cent in early trading.

The dollar index fell 0.039 per cent, with the Japanese yen strengthening 0.12 per cent versus the U.S. currency at 135.96 per dollar.

Benchmark 10-year notes fell 1.5 basis points to 3.4906 per cent on Tuesday.

U.S. crude rose 0.39 per cent to $71.39 per barrel and Brent was at $75.55, up 0.43 per cent on the day.

Spot gold dropped 0.2 per cent to $2,016.75 an ounce.