Asian stocks rose on Tuesday after a six-day losing streak and the dollar firmed against the safe-haven Japanese yen, but the gains were capped as a slump in China’s imports raised fears of a more severe slowdown in the world’s second biggest economy.
Following Asia’s lead, spreadbetters expect Britain’s FTSE 100 to open up 0.1 per cent, Germany's DAX to rise 0.2 per cent, and France’s CAC 40 to gain 0.2 per cent.
China’s August exports fell less than expected, but a steeper slide in imports pointed to continuing economic weakness. A day earlier foreign exchange reserve data revealed a record $94 billion drop in August as the central bank struggled to steady the yuan after its surprise devaluation.
The weak data raised expectations of more policy easing in the coming months. A Reuters poll at end-August showed a 80 per cent of respondents expected a further cut in banks’ reserve requirement ratio and 70 percent saw a chance of interest rate cuts.
“I’m not optimistic about the prospect of exports and it’s unlikely China can achieve the export target this year,’’ said Nie Wen, analyst at Hwabao Trust in Shanghai. “There will be at least three more reserve requirement rate cuts this year to counteract capital outflows.’’
MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.5 per cent but remained near a three-year low hit two weeks ago.
US stock futures trimmed gains to 0.7 per cent after a long weekend.
Japan’s Nikkei fell 2.3 per cent, extending its rebound from a seven-month low hit early on Monday while Australia rose 1.2 per cent in early trade.
Chinese stocks extended losses, while Hong Kong edged higher.
With US financial markets shut on Monday, the dollar moved little against major currencies.
The dollar index stood at 95.813, little changed from late last week.
Against the yen, the dollar ticked up slightly to 119.07 yen, still half-way in recovering its losses on Friday. The euro stood little changed at $1.11670.
Oil prices fell more than 3 per cent on Monday as the drop in Chinese share prices and record North Sea production added to global oversupply concerns.
Brent crude futures rose 0.7 per cent to $47.94 after a 3.7 percent fall on Monday. They still traded below the 50 percent retracement of their rally late August to $54.32 from 1/2-year low of $42.23.