Mainland Chinese markets edge higher amid better-than-expected industrial output, retail sales

Mainland Chinese markets climbed on Monday morning, as data showed that the country’s industrial output and retail sales rose more than expected in November.

The Shanghai composite edged up, and the Shenzhen component jumped 0.81 percent. The Shenzhen composite was up 0.82 percent, while Shenzhen’s Nasdaq-style start-up board ChiNext jumped 1.14 percent. Hong Kong’s Hang Seng index, however, was down 0.29 percent.

The country’s industrial production rose 6.2 percent year-on-year in November, according to its National Bureau of Statistics, above a Reuters forecast of a 5.0 percent growth. Retail sales rose 8.0n percent year-on-year, also above expectations of a 7.6 percent growth.

Meanwhile, Asian markets had a mixed reaction to news that China and the U.S. announced they were finally set to sign off on a phase one trade agreement.

Australia’s S&P/ASX 200 jumped 1.76 percent, led by banks and major miners.

But Japan’s Nikkei 225 and the Topix index were flat after a strong rally on Friday. Autos fell, reversing gains they made last week on the back of Brexit optimism.

Over in South Korea, the Kospi was flat.

Overall, MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.32 percent.

U.S. Trade Representative Robert Lighthizer said on Sunday that the phase one U.S.-China trade deal reached on Friday is totally done, and it will nearly double U.S. exports to China over the next two years.

U.S. and Chinese officials announced on Friday that the countries had reached a phase one agreement after a contentious 18-month trade war.

China agreed to billions of dollars in agricultural purchases from the U.S., while U.S. President Donald Trump vowed to not pursue a new round of tariffs that had been scheduled for Sunday. The two major economies plan to sign the partial accord in the first week of January.

U.S. stocks didn’t move much by the Friday close after those trade developments. The Dow Jones Industrial Average ended the day just 3.33 points higher at 28,135.38. The S&P 500 closed just above the flatline at 3,168.80 while the Nasdaq Composite gained 0.2 percent to 8,734.88.

Analysts advised caution on the upbeat trade news.

John Bromhead, foreign exchange strategist at ANZ Research, said: “The US and China reach another trade agreement but markets are quick to question the level of positivity emanating from the announcement.”

“The announcement is a step in the right direction for the two nations, but does not completely reduce the chances of trade disputes between the two nations in the year,” he said, adding that there have been no indications from the U.S. that there will be a further rollback in tariffs in the future.

“A trade disaster averted, but nowhere in the vicinity of a global trade break-through that ‘lifts all boats’; in fact, not even trade uncertainty is completely lifted,” Vishnu Varathan, head of economics and strategy at Mizuho Bank, wrote in a note. “The wider point is that a lot of work is left to be done on US-China relations.”

Apple suppliers

Apple led Friday’s slight gains, rising 1.4 percent to a record after news of the trade agreement was announced. Some of the tariffs set to take effect Sunday would have impacted some of Apple’s key products, including the iPhone.

Over in Asia, shares of Apple suppliers were watched for any optimism on that development.

Taiwan’s Hon Hai Precision Industry, better known as Foxconn and Apple’s largest manufacturer, was up 0.88 percent, while Pegatron leaped 1.45 percent. Over in Hong Kong, Sunny Optical jumped 1.68 percent, while AAC Tech bounded 1.66 percent.

Currencies and oil

The U.S. dollar index, which tracks the greenback against a basket of its peers, was last at 97.122 after seeing highs above the 97.7 level last week.

The Japanese yen traded at 109.35 against the dollar, weakening from 109.27 the day before. The Australian dollar changed hands at $0.6878, weakening from levels above $0.693.

Oil prices declined in morning trade during Asian hours: Global benchmark Brent fell 0.28 percent to $65.04 per barrel while U.S. crude was down 0.30 percent at $59.89.

Source: CNBC