Asian stocks cheered by China trade surprise

Reuters Updated - January 19, 2018 at 03:44 PM.

asia

Asian shares made their first real rally of the year on Wednesday after Chinese data trade data beat expectations, offering a rare shaft of light for the global economy.

Japan's Nikkei jumped 2.6 per cent from a near-one-year trough, while battered Australian stocks gained 1.3 per cent. MSCI's broadest index of Asia-Pacific shares outside Japan sped ahead by 1.6 per cent and away from its lowest since late 2011.

Even China's mercurial markets found some relief with the Shanghai Composite Index up 0.8 per cent and the CSI300 index 0.9 per cent.

The good cheer spread to E-mini futures contracts for the S&P 500 which climbed 0.8 per cent.

China trade data

The gains came after China reported its exports had risen 2.3 per cent in yuan-denominated terms in December, from a year earlier while imports dipped 4.0 per cent.

In US dollar terms, China's December exports exceeded analyst expectations, falling 1.4 per cent from a year earlier, while imports fell by 7.6 per cent. Analysts polled by Reuters had expected exports to fall 8.0 per cent and imports to fall 11.5 per cent.

While investors harbour suspicions about the reliability of the data, on the surface they offered hope that world trade flows were at least stabilising after a dismal 2015.

It also suggested Beijing might prove successful in its increasingly forceful attempts to stabilise the yuan, so dampening fears of a sustained devaluation.

All of which galvanised currency markets where the Australian dollar, often used as a liquid proxy for the yuan, was up half a US cent at $0.7036.

Currency movement

With safe-haven suddenly out of favour, the Japanese yen and the euro eased broadly. The US dollar moved up to 118.22 yen from an early 117.61, while the euro slipped to $1.0815 from $1.0860.

Against a basket of currencies, the dollar gained 0.2 per cent.

Likewise, low-risk sovereign debt had to surrender a little of their recent gains and yields on 10-year paper nudged up 3 basis points 2.137 per cent.

The hint of firmer demand from China provided a reprieve for commodity prices, which have been under the hammer for months.

Crude oil

US crude edged up 44 cents to $30.88 a barrel a day after diving as deep as $29.93 to break the $20 barrier for the first time in 12 years.

Benchmark Brent was quoted 31 cents higher at $31.17 a barrel. US crude had fallen 17 per cent in just seven sessions, a gift to consumers across the globe but also a strong force for disinflation.

Published on January 13, 2016 03:55