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 percent to 2,124.92, its highest since August 1990, helped by the robust outlook of its megabanks.

China’s industrial output grew 5.6 percent in April from a year earlier, accelerating from the 3.9 percent 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- percent increase in a Reuters poll of analysts.

China April industrial output rises 5.6%, retail sales jump 18.4%; below expectations

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 percent 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 percent. But Hong Kong’s Hang Seng index extended its rally of the previous day, opening 0.53 percent higher, with the tech gauge climbing 1.19 percent.

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

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

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

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

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

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

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