China Stocks Lag Asia Markets Ahead Of Data Deluge

Big 5
Most Asia markets headed for their third straight day of gains Wednesday, with resource stocks and exporters strong amid hopes for further U.S. and European monetary easing, though Chinese shares slipped ahead of key economic data.

Japan’s Nikkei Stock Average 100000018 climbed 0.9%, South Korea’s Kospi SEU rose 1.2%, and Australia’s S&P/ASX 200 Index XJO advanced 0.5%.

Chinese stocks put in a less impressive performance ahead of key economic data due Thursday, with Hong Kong’s Hang Seng Index HSI down 0.3% and the Shanghai Composite Index 000001 easing 0.1% lower.

“People will be watching tomorrow’s data to see if easing is having an effect [on the Chinese economy],” said Andrew Sullivan, principal sales trader at Piper Jaffray. “There’s caution ahead of the data.”

July statistics on Chinese retail sales, inflation, industrial production and fixed-asset investment are all due out Thursday.

Sullivan said that hopes for more quantitative easing pushed the U.S. market higher for a third straight session Tuesday, and that investors felt the market was currently being driven by macroeconomic factors, rather than fundamentals such as valuations and earnings. Read more on U.S. stocks.

Investors have also been growing more optimistic of late for action from the European Central Bank, including buying bonds of the weaker European economies. Read Matthew Lynn’s column on the ECB outlook,

Major movers

On Wednesday in Asia, investors were buying into beaten-down resource shares. In Japanese trade, Kobe Steel Ltd. 5406 gained 1.5%, JFE Holdings Inc. 5411 JFEEF added 1.7%, and Inpex Corp. 1605 IPXHY advanced 0.7%.

In Sydney, Fortescue Metals Group Ltd. FMG  FSUMF rose 1.7%, and Newcrest Mining Ltd. NCMNCMGF improved by 1.4%.

Hong Kong also saw some commodity-linked firms gaining ground, with China Coal Energy Co. 1898  CCOZY rising 1.3% and PetroChina Co. 857  PTR 1.6% higher.

Among other Hong Kong advancers, Standard Chartered PLC STAN 2888 rose 0.9%, recovering a bit from the previous session’s sell-off in the wake of accusations the firm hid transactions involving Iran. Standard Chartered has rejected the allegations.

Exporters performed well in much of Asia, particularly in Tokyo, where Sony Corp. 6758SNE gained 1.2%, and Advantest Corp. 6857ADTTF shot 2.5% higher after the yen weakened overnight.

The Bank of Japan was due to announce its latest policy decision on Thursday, and economists would be looking for any sign the central bank will act to steer the economy toward its 1% inflation goal.

“It is significant that since its last meeting, two BOJ board members have been confirmed, and that those board members hail from the private sector and appear decidedly dovish, which means there is likely at least to be greater pressure for action,” said Naomi Fink, equity strategist at Jefferies Japan.

Also in Tokyo, Nikon Corp. 7731NINOF rose 3.1% after reports that the firm is heading for a tie-up with Intel Corp. INTC.

Sharp Corp. 6753  SHCAF advanced 3.3% following a Nikkei news report that Hon Hai Precision Industry Co. 2317 would soon publicly confirm its investment in Sharp remains in place despite concerns to the contrary. Hon Hai gained 0.5% in Taipei. Read more on reported upcoming Sharp-Hon Hai announcement.

Separately, the Yomiuri Shimbun reported Wednesday that Sharp has started talking to creditor banks about a current plan designed to strengthen its finances. Read more on Sharp’s reported talks with banks.

On the downside of Tokyo action, shares of Pioneer Corp. 6773PNCOF fell 6.1% after swinging to a quarterly loss.

Hong Kong trading saw airline Cathay Pacific Airways Ltd. 293 fall 4% after reporting that it swung to a first-half net loss due to higher fuel costs and weaker demand. Read more on Cathay Pacific results.

In Sydney, losses for telecom major Telstra Corp. TLSTTRAF, one of Australia’s most widely owned firms, fell 2.2%, as UBS downgraded the stock to neutral from buy, citing the company’s recently strong share price performance. The decline kept gains for the broader Australian market in check.