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China Growth Data and Fed Pledges Lift Asia’s Markets
Tokyo closed down with investors concerned about the virus situation in Japan. Photo: Reuters

• Fed Chair Jerome Powell vows to continue stimulus programme

• Hang Seng climbs but Japan Covid fears pull back Nikkei

 

Asia’s markets were mostly in the positive on Thursday after China released a raft of key data indicating solid but slowing growth, while the Federal Reserve chief said the US central bank would continue its stimulus programme until the recovery was well underway.

China’s growth slowed to 7.9% in the second quarter, down from 18.3% in the previous three months when the economy roared back to life after last year’s pandemic-enforced shutdown.

The National Bureau of Statistics said the world’s second-largest economy continued to “recover steadily”, but sounded a note of caution over external uncertainties and the uneven domestic economic rebound.

 

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“Efforts are still needed to consolidate the foundation for stable recovery and development,” it added.

In June, industrial output rose 8.3% and retail sales grew 12.1%, both edging down from the month before.

“The overall growth perspective is still pretty resilient in terms of industrial production and retail sales,” Helen Qiao, chief Greater China economist at Bank of America Securities, told Bloomberg Television.

The latest figures suggest China should be on track to meet its growth target of more than 6% this year.

 

DOVISH FED

Investors were also digesting dovish comments by Fed Chair Jerome Powell, who acknowledged inflation was stronger than the US central bank would like but said the economy still had “a long way to go”.

The Fed “will ensure that monetary policy will continue to deliver powerful support to the economy until the recovery is complete,” Powell said on Wednesday in his semi-annual testimony to Congress.

The Dow and S&P 500 posted slight gains following Powell’s comments but the Nasdaq finished lower.

Asian markets largely welcomed Powell’s remarks and the Chinese figures, with Hong Kong closing up and Shanghai adding just over 1%. Seoul, Taipei, Bangkok, Kuala Lumpur and Jakarta were also in positive territory.

 

VIRUS FEARS

The Hang Seng Index climbed 0.75%, or 208.81 points, to 27,996.27. The benchmark Shanghai Composite Index rose 1.02%, or 36.09 points, to 3,564.59, while the Shenzhen Composite Index on China’s second exchange added 0.35%, or 8.65 points, to 2,478.72.

Among the few regional losers, Tokyo closed down with investors still concerned about the virus situation in Japan while locked-down Sydney also retreated.

The benchmark Nikkei 225 index lost 1.15 percent, or 329.40 points, to end at 28,279.09, while the broader Topix index fell 1.20 percent, or 23.55 points, to 1,939.61.

“Regional Asia had the most to lose from a change in Fed tone, and the Powell testimony overnight has likely driven the gains,” said OANDA’s Jeffrey Halley.

Oil prices fell in Asian trade, with both main contracts down more than 1% after data showed a rise in US gasoline inventory despite a decline in crude stocks.

 

MARKETS

Tokyo – Nikkei 225: DOWN 1.2% at 28,279.09 (close)

Hong Kong – Hang Seng Index: UP 0.8% at 27,996.27 (close)

Shanghai – Composite: UP 1.0% at 3,564.59 (close)

London – FTSE 100: UP 0.1% at 7,095.47

 

  • Reporting by AFP

 

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