Asia Markets

Most Asian indexes close higher after Japan GDP beats expectations; China data disappoints

Key Points
  • Second-quarter Japan GDP beat expectations
  • China industrial output, retail sales and fixed asset investment miss expectations
  • The dollar was stable after tumbling last Friday when U.S. July CPI disappointed

The Nikkei 225 fell despite second-quarter Japan GDP surprising to the upside as investors in Asia digested the release of a barrage of China data on Monday.

Japan's benchmark index fell 0.98 percent, or 192.64 points, to close at 19,537.10, as markets re-opened after a public holiday last week. Markets appeared to shrug off headlines that the Japanese economy grew at an annualized rate of 4 percent in the second quarter of the year ending in June compared to the previous year. That easily topped the 2.5 percent rise forecast in a Reuters poll.

The yen softened against the dollar following the GDP beat, with the greenback fetching 109.20 yen after the data release compared to levels around 109.14 yen seen before. The Japanese currency last traded at 109.53 yen to the dollar.

"Although it is usually exactly the wrong thing to respond to volatile Japanese GDP data by revising full year forecasts, arithmetically, it is going to be hard for us to see only the 1.2 percent for 2017 we currently have penciled in," said ING Asia Head of Research Robert Carnell in a note, adding that an upgrade now seemed "extremely likely."

Meanwhile, South Korea's Kospi rose 0.63 percent, or 14.51 points, to end at 2,334.22, after being pressured by geopolitical tensions for most of the last week.

In Australia, the S&P/ASX 200 climbed 0.65 percent, or 37.260 points, to finish at 5,730.400, with the broader index driven by gains in the information technology, energy and heavily-weighted financials sub-indexes.

Greater China markets trended higher even though a raft of data released Monday missed expectations. Hong Kong's gained 1.28 percent by 3:15 p.m. HK/SIN. On the mainland, the advanced 0.88 percent, or 28.3887 points, to close at 3,236.930 while the Shenzhen Composite jumped 2.017 percent, or 37.1677 points, to end at 1,879.7658.

Factory output in China rose 6.4 percent in July compared to the previous year, below the 7.2 percent predicted in a Reuters poll. Meanwhile, fixed asset investment rose 8.3 percent in the first seven months this year, below the 8.6 percent forecast. Retail sales grew 10.4 percent compared to one year ago, falling short of the 10.8 percent rise forecast.

"Previously, (the) market was concerned about a potential tightening of monetary policy if data ran too hot. Now there is less reason to worry given the weak data," said Bank of Communications International Head of Research Hao Hong.

Thailand markets were closed for a public holiday.

Over in the U.S., July consumer prices were weaker than expected, rising just 0.1 percent compared to the month before, Reuters reported on Friday. That was below the 0.2 percent forecast in a Reuters poll. The CPI rose 1.7 percent compared to the previous year, which was a tad below the 1.8 percent expected. However, the figure remained under the Federal Reserve's 2 percent inflation target.

The dollar index was steady at 93.064 at 3:11 p.m. HK/SIN after tumbling on inflation numbers last Friday. The U.S. currency had fallen against a basket of rivals on Friday, trading as low as 92.934 compared to the 93 handle seen for most of last week.

Markets also kept an eye on developments in the Korean peninsula after tensions flared up between the U.S. and North Korea last week. Over the weekend, the hermit state claimed that more than 3 million volunteers had offered to join its army, Reuters said. A U.S. intelligence official said on Sunday that it would not be unexpected for North Korea to test another missile.

In corporate news, Commonwealth Bank of Australia CEO and Managing Director Ian Narev is expected to retire by the end of the 2018 financial year, the bank said on Monday. CBA has recently been dogged by allegations that it potentially ignored breaches in money-laundering regulations in Australia. CBA shares finished the session up 1.01 percent.

In individual stocks, Australia's Bendigo and Adelaide Bank closed up 7.46 percent after the bank reported full-year net profit after tax attributable to owners rose 3.4 percent. Other Australian financials were a mixed picture: with National Australia Bank up 1.79 percent, but AMP off by 0.59 percent.

Meanwhile, shares of Ansell closed down 3.06 percent after the rubber products manufacturer announced full-year profit fell 7.2 percent and missed estimates, Reuters reported. The company attributed the fall in profit to increasing raw material prices and acquisition charges.

Other market movers included Hong Kong-listed Wanda Hotel Development stock, which soared 40.79 percent by 3:11 p.m. HK/SIN. Wanda Hotel said last week it would be buying $1 billion in assets from companies controlled by Dalian Wanda Group Chairman Wang Jianlin as the company attempts to restructure.

"With these kinds of takeovers, it's hard to say what true value is, so we will still expect to see rather large fluctuations," Haitong International Securities Director of Investment Strategy Kevin Leung told CNBC in an email.

Taiwan-listed Hon Hai Precision Industry saw its stock give up 2.15 percent after the company announced second-quarter earnings last Friday that were shy of market consensus.

Despite that, Nomura analysts maintained their "buy" call on the company and raised their target price for Hon Hai stock to 139 Taiwan dollars ($4.58) from 107.0 Taiwan dollars. "We think Hon Hai is on the right track to deliver strong profitability by manufacturing higher-value end products," they said in a Monday note.

Oil prices were stable after making gains on Friday as markets digested a mix of higher demand forecasts from the IEA and an expected rise in shale production, Reuters reported. Brent crude was off 0.04 percent at $52.08 a barrel and U.S. crude added 0.06 percent to trade at $48.85.

In currency markets, the Australian dollar, which is usually sensitive to Chinese economic data, was softer after China data released on Monday missed expectations. The Aussie dollar traded at $0.7905 after the data release, compared to levels around $0.7914 seen just before. The Australian currency traded at $0.7893 at 3:11 p.m. HK/SIN.

In the U.S., stocks closed slightly higher in the Friday session after being rattled earlier in the week by U.S.-North Korea tensions.