Asia stock markets post weekly gains as investors digest Chinese GDP data

Asia stock markets ended mixed on Friday as investors digested a data deluge from China, although stocks still managed to post weekly gains. The moves in Asia came after another record close in U.S. stocks on Thursday.

Australia’s ASX 200 closed up 17.99 points, or 0.33 percent, at 5,429.60, boosted by advances in the heavily-weighted financials sub-index, as well as in the energy and material sub-indexes. For the week, the Australian benchmark index advanced 3.81 percent.

In South Korea, the Kospi index closed up 8.49 points, or 0.42 percent, at 2,017.26, gaining 2.76 percent for the week.

Japan’s benchmark Nikkei 225 posted a weekly gain of 9.20 percent, closing up 111.96 points, or 0.68 percent, at 16,497.85 on Friday. The Topix finished up 5.94 points, or 0.45 percent, at 1,317.10. In Hong Kong, the Hang Seng index traded up 0.23 percent in late afternoon trade, after wavering between gains and losses throughout the session.

Chinese mainland markets gave up gains in afternoon trade to close near flat, following a somewhat muted reaction to the second quarter gross domestic production (GDP) number released in the morning.

The Shanghai composite ended flat at 3,053.68, posting a weekly gain of 2.19 percent. The Shenzhen composite slipped 6.19 points, or 0.30 percent, at 2,038.73.

“It has been “risk on” again over the last week in investment markets, helped by a combination of good economic data in the U.S. and China, good U.S. earnings news and firming expectations of more policy stimulus in Japan,” said Shane Oliver, head of investment strategy and chief economist at AMP Capital.

“Markets generally have moved on from the initial panic reaction seen in the days after the Brexit vote,” added Oliver.

Retail sales for June in China were up 10.6 percent on-year, industrial output for June grew 6.2 percent on-year, while fixed asset investment for the January-June period was up 9 percent on-year, according to Reuters.

“Overall June activities are much stronger than expectation,” said Haibin Zhu, chief China economist at JPMorgan, adding today’s data suggested China is on track to achieve this year’s growth target.

HSBC economist Jing Li said favorable monetary conditions in the first half of 2016 helped to support fiscal expansion and contribute to Friday’s “upside surprise in Q2 GDP and June activity data.”

But Li warned downside risks to growth remained, which could see the Chinese government continue with expansionary monetary and fiscal policies in the second half of the year.

“Property sales have continued to soften, suggesting that the housing market is still cooling,” Li said. “Private sector investment may continue to decline in the near term, given poor business sentiment. Last but not least, the outlook on external demand remains uncertain at best.”

Ahead of the data dump in the world’s second-largest economy, Chinese premier Li Keqiang said this week the country’s economy was “basically stable”, after suggesting on July 4 it was “not easy” to achieve the first quarter’s 6.7 percent growth rate.

Singapore’s Straits Times index was up 0.45 percent in late afternoon trade, after being shut from trade much of Thursday due to a technical glitch.

The Singapore Exchange (SGX) said its securities market was halted from trade on Thursday late-morning, after a technical glitch affected the SGX’s trade confirmation processes. The market was put into an “adjust phase,” where orders were allowed to be placed, removed or amended but no matching took place.

Oil prices declined during Asian hours, with global benchmark Brent down 1.39 percent at $46.71 a barrel as of 3:18 p.m. HK/SIN, while U.S. crude futures were down 1.31 percent to $45.08.

Gold prices retreated 0.23 percent to $1,331.67 an ounce as investors turned to riskier assets. Gold is considered a safe-haven asset.

Government bond yields in Asia also increased, with the yield on the 10-year Japanese government bond at negative 0.225, compared to levels near negative 0.262 in the previous session.

In Japan, messaging app Line made its debut at the Tokyo Stock Exchange with an opening price of 4,900 yen per share, amid heavy buy orders, compared to its offering price of 3,300 yen. The stock closed up 31.66 percent at 4,345 yen.

This follows Line’s debut on the New York Stock Exchange on Thursday and share prices closed up 26.61 percent at $41.58. The social networking firm’s NYSE float was the largest technology initial public (IPO) offering of 2016 and its share prices jumped more than 30 percent after they opened.

Shares of Line’s parent company, South Korean internet giant Naver, closed down 2.45 percent, retracing earlier gains of more than 1.5 percent.

Nintendo closed up 9.8 percent at 27,780 yen per share, climbing 93.18 percent since the release of the hugely popular “Pokemon Go” mobile game on July 6, which investors anticipate will add to the game console maker’s bottom line; Nintendo owns stakes in both the Pokemon Company and the developer of the game, Niantic.

In the currency market, the dollar remained at the 96 handle, trading against a basket of currencies at 96.028 as of 3:23 p.m. HK/SIN. Among other currency majors, the Japanese yen remained relatively weaker, trading at 105.80 against the greenback, compared to near 100 levels it touched in the previous week.

The British pound traded at $1.3356 on Friday afternoon Asia time, after rising to a two-week high of $1.3480 on Thursday, following the Bank of England’s (BOE) decision to leave its interest rates on hold, despite market expectations for a cut.

Instead, the bank’s Monetary Policy Committee (MPC) voted by a majority of eight-to-one to hold the rate at 0.5 percent and unanimously to make no further additions to its £375 billion ($501.2 billion) quantitative-easing program. There were, however, strong hints of easing in August.

“Sterling’s reaction today to BOE is a classic example of misplaced expectations. Economists were calling for a cut, investors believed them and when the BOE kept policy unchanged, sterling jumped from 1.3250 to 1.3475,” said Kathy Lien, managing director of foreign exchange strategy at BK Asset Management in a late-Thursday note.

Lien added, “The rally faded as the day progressed because the main takeaway from BOE is simple – rates will be lowered in three weeks and [Gertjan] Vlieghe [a member of the BOE’s monetary policy committee] wanted the move to happen today.”

Source: CNBC