Asia Markets

Asian shares end mixed, dollar weaker as investors focus on China GDP, eye Korea tensions

Koichi Kamoshida | Getty Images

Asian equities ended mixed in Monday trade, with the dollar sinking against the yen, following tensions in the Korean Peninsula and better-than-expected Chinese economic data.

North Korea tested a missile which "blew up" soon after launch, following a military parade over the weekend, Reuters said. The test came before U.S. Vice President Mike Pence arrived in Seoul for a trip aimed at reassuring American allies in Asia.

The dollar/yen traded at 108.41, earlier plunging to its lowest levels since November. Likewise, the yen was stronger compared with the euro, with the euro/yen weakening to a five-month low of 114.82 yen earlier in the session. The euro/yen traded at 115.14 yen at 2:30 pm HK/SIN.

Demand for other safe-haven assets strengthened, with spot gold trading at $1,287 an ounce at 2:30 pm HK/SIN, hitting a five-month high of $1,295.50 earlier in the session.

"Gold has surged (classic geopolitical risk reflex) along with the slump in U.S. Treasury yields (another haven trade) while equities are softer ... Nonetheless, emerging markets and higher yielding currencies have not sold off in alarm either, with most emerging market Asia currencies still fairly buoyant," Mizuho economist Vishnu Varathan said in a Monday morning note.

Japan's Nikkei 225 reversed earlier losses to rise 0.11 percent, or 19.63 points, to close at 18,355.26, while the Kospi climbed 0.51 percent, or 10.88 points, to finish at 2,145.76. Hong Kong, Australia and New Zealand markets were closed for Easter Monday.

Mainland Chinese markets were mostly lower even though economic data released earlier in the day was slightly better than expected. The declined by 0.75 percent, or 24.3937 points, to close at 3,221.6731, while the Shenzhen Composite fell 1.414 percent, or 28.0977 points, to end at 1,958.5519.

China data provides a 'cushion'

China first-quarter GDP rose 6.9 percent on year, higher than the 6.8 percent forecast. First quarter GDP rose 1.3 percent quarter-on-quarter. Other Chinese data was similarly upbeat, with March industrial output accelerating 7.6 percent on year, the fastest pace of growth since December 2014, according to Reuters.

The Chinese economy has returned to an "investment-driven growth model," as seen from the 9.2 percent on year growth in March fixed asset investment (FAI), ANZ economists Raymond Yeung and David Qu said in a note. However, this could pose questions regarding sustainability "as the authorities have trouble taming credit."

On the energy front, Brent crude was lower by 0.82 percent to trade at $55.43 per barrel and U.S. crude fell by 0.83 percent to trade at $52.74 at 2:30pm HK/SIN time.

In other currency news, the greenback traded weaker against a basket of rivals at 100.4, significantly lower compared with the 101 handle seen last week. The Aussie strengthened to trade at $0.7586, its highest level since the beginning of April.

'Prepare for more dollar weakness,' UBS says

"What we see right now is the starting point for the dollar into 2017 was just very, very rich in terms of valuation. And as we see more disappointment from let's say Trump's policy and as the world outside the U.S. looks better, I think we're still going to see that continuation of dollar weakness," UBS head of commodities and foreign exchange, Dominic Schnider, told CNBC.

"It's not going to be a weak currency, but the dollar continues to slide on a trade-weighted basis."

Over in Singapore, March non-oil domestic exports (NODX) beat expectations and surged 16.5 percent on year, driven by a 20.5 percent year-on-year rise in non-electronic NODX.

"Singapore's recent export data in early 2017 has been strong, helped by the upturn in global electronics output and the impact of higher world oil prices on refined petroleum export values," IHS Markit Chief Economist Rajiv Biswas noted.

Stateside, U.S. equities were lower across the board before the Good Friday holiday, with the Dow Jones industrial average, and Nasdaq all down by more than 0.5 percent.