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Asia markets advance, shrugging off weak Chinese trade data

Japanese shares led gains as Asia markets rallied on Monday despite weak Chinese trade data as sentiment was likely boosted by a stronger-than-expected U.S. jobs report released Friday.

Japan's benchmark Nikkei 225 closed up 396.12 points, or 2.44 percent, at 16,650.57, while the Topix added 25.63 points, or 2 percent, to 1,305.53. Japanese shares also received some boost from a relatively weaker yen.

In Australia, the ASX 200 closed up 40.39 points, or 0.73 percent, at 5,537.80, with the heavily-weighted financials sub-index advancing 1.09 percent. Major banks in the country gained nearly 1 percent or more, with National Australia Bank adding 1.43 percent.

In South Korea, the Kospi closed up 13.18 points, or 0.65 percent, at 2,031.12. Hong Kong's Hang Seng Index was up 1.39 percent in late-afternoon trade.

Chinese mainland markets climbed, with the Shanghai composite closing up 28.02 points, or 0.94 percent, at 3,004.71, while the Shenzhen composite added 20.65 points, or 1.06 percent, to 1,962.26.

In a sign of improving economic health, the U.S. added 255,000 jobs in July, compared with economists' expectations for an increase of 180,000.

"Hotter than forecast average workweek hours, hourly earnings and participation rate suggests this report was of genuine quality," said Chris Weston, chief market strategist at brokerage firm IG, in a note to clients.

The jobs beat saw major U.S. indexes close sharply higher on Friday, with the S&P and the Nasdaq posting their strongest close ever.

Symbol
Name
Price
 
Change
%Change
NIKKEI
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HSI
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ASX 200
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SHANGHAI
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KOSPI
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CNBC 100
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Asia markets shrugged off weak China data. China's exports and imports fell more-than-expected in dollar-denominated terms in July, which could revive concerns over the economic outlook for the world's second largest economy both at home and abroad.

Exports for July fell 4.4 percent on-year, while imports declined by 12.5 percent in dollar terms, reported Reuters. Analysts polled by Reuters had predicted declines of 3 and 7 percent, respectively. The trade surplus for the month came in at $52.31 billion.

Economists said the data didn't bode well for China's exports, but at least one analyst noted that trade wasn't quite as important to the mainland as it used to be.

"China is less reliant on external demand than it used to be and we still think the continued feed through from stronger credit growth will provide some further support to domestic demand during the rest of this year," Julian Evans-Pritchard, China economist at Capital Economics, said in a note Monday.

"We are not overly concerned about the immediate prospects for China, despite today's disappointing data."

In the currency market, the Japanese yen was relatively weaker against the dollar, trading as low as 102.25 early morning. As of 2:22 p.m. HK/SIN, the dollar/yen pair traded at 102.05, compared with levels near 100.8 in the previous week.

The weakness in the yen likely boosted major exporters in Japan. Shares of Toyota closed up 3.33 percent, Nissan was higher by 2.60 percent and Mazda Motor gained 5.70 percent.

The dollar was up 0.02 percent at 96.217 against a basket of currencies, compared with levels under 96 before the jobs report on Friday.

"Friday's unambiguously strong non-farm payrolls report sent the U.S. dollar soaring against all of the major currencies," said Kathy Lien, managing director of foreign exchange strategy at BK Asset Management in a late-Friday note.

"The outlook for the economy is also bright with the rise in the participation rate and number of hours worked per week," she said, adding it was a "sharp comparison to the grim outlooks for the U.K., Japan, parts of the Eurozone and Canada."

The Chinese yuan was marginally weaker against the greenback, trading at 6.6588. Analysts at ANZ Research said that the yuan, which is also known as the renminbi, will see "modest depreciation pressures in the near term" despite the "sizeable" trade surplus registered in July.

Japanese government bond (JGB) yields rose on Monday; the yield on the 10-year JGB was at negative 0.048 percent, compared with levels near negative 0.10 percent on Friday. Bond prices move inversely to yields.

In company news, Singapore's DBS Group announced its net profit for the second quarter was down 6 percent on-year at 1.05 billion Singapore dollars ($778 million) due to a net allowance charge of S$150 million for the bank's exposure to the Swiber group, which was placed under judicial management.

For the first half 2016, DBS said its net profit was at S$2.25 billion.

DBS shares traded up 1.62 percent.

Shares of Mitsubishi Heavy closed up 4.64 percent, after Reuters reported, citing a local news agency, that Iran intends to buy 20 regional jets from a business unit belonging to the company. Reuters said, citing the Mehr News agency, that the deal was likely to be finalized when a Japanese delegation visits Tehran in December.

On the earnings front, Australian bank Bendigo and Adelaide Bank announced an after-tax profit of 415.6 million Australian dollars ($316.41 million) for the 12 months ended June 30, 2016. Cash earnings were at A$439.3 million, a 1.6 percent on-year increase.

Shares of Bendigo and Adelaide Bank closed up 4.32 percent.

Andia | UIG | Getty Images

Oil prices were higher during Asian hours, with U.S. crude futures adding 0.41 percent to $41.97 a barrel, while global benchmark Brent was up 0.41 percent at $44.45.

Asian energy plays broadly advanced, with Oil Search adding 1.93 percent, Woodside Petroleum rising 1.93 percent, Inpex gaining 3.18 percent and Japan Petroleum up by 3.66 percent.

Gold prices were flat on Monday, after spot gold retreated on Friday by nearly 2 percent on the back of the strong U.S. jobs report. As of 2:34 p.m. HK/SIN, spot gold traded at $1,335.40 an ounce.

The precious metal had been trading near a two-year high, with several prominent investors, including Bill Gross, favoring the commodity.

In Thailand, voters approved a military-backed constitution in a referendum on Sunday, according to preliminary results, reported Reuters. The outcome paved the way for an election next year, but also required future elected governments to rule on the military's terms, said Reuters.

Analysts told CNBC that the outcome could improve investor sentiment on the country amid expectations it could improve political stability.

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