Buoyant Japanese stocks led Asian stocks to modest gains on Monday, helping to offset some of the gloom from soft Chinese data, while the dollar firmed against the euro and yen after receiving a boost from upbeat US indicators.
Spreadbetters saw a slightly lower open for Britain’s FTSE, Germany’s DAX and France’s CAC in the wake of the soft Chinese indicators, which have added to doubts about whether the world’s second-largest economy is stabilising.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.5 per cent. Hong Kong's Hang Seng added 1.2 per cent, Australian stocks advanced 0.6 per cent and South Korea's Kospi was little changed.
Tokyo's Nikkei climbed 0.6 per cent, buoyed by a weekend media report that Japan was poised to delay a sales tax hike set for April 2017. Hopes for more government fiscal stimulus also favoured Japanese shares.
It held some of its early gains despite a denial by Japan's top government spokesman on Monday that Prime Minister Shinzo Abe has decided to postpone the tax hike.
"There is no such fact. It is utterly groundless," Chief Cabinet Secretary Yoshihide Suga told a news conference, repeating that the government will increase the levy as planned unless there was a financial crisis on the scale of the Lehman Brothers collapse or a major natural disaster.
Shanghai stocks initially fell on the downbeat China data released over the weekend, but pared the losses to trade 0.3 per cent higher after the country’s securities regulator denied media reports it was cracking down on fundraising and mergers and acquisitions in certain sectors.
Indicators released on Saturday showed China’s investment, factory output and retail sales all grew more slowly than expected in April, raising fears that a bounce seen in March is fizzling.
“Chinese data over the weekend managed to miss market expectations for every single release: credit growth, industrial production, retail sales, and fixed-asset investment,” wrote Angus Nicholson, market analyst at IG in Melbourne.
“The miss on the activity front wasn’t a huge surprise given we already saw a levelling off in the PMIs, but the dramatic slowing in credit growth will be raising some red flags in the already-reversing commodities space.”
Aluminium was stuck near a one-month low and copper was in close reach of a two-month low.
Commodities were hurt as the dollar reached a two-week high against a basket of currencies on Friday’s upbeat April U.S. retail sales data, which jumped 1.3 per cent for the largest gain since March 2015.
A stronger greenback tends to weigh on non-U.S. buyers of dollar-denominated commodities.
The dollar rose 0.2 per cent to 108.89 yen after spiking briefly on Friday to 109.57, its highest since late April, in reaction to strong US data.
The euro was flat at $1.1305 after slipping to a two-week low of $1.1283 on Friday.
The Australian dollar slipped to two month low of $0.7236 earlier on Monday before crawling back to $0.7285.
US crude oil gained 1.3 per cent to $46.81 a barrel after shedding more than 1 per cent Friday on the dollar’s gains. Brent rose 1.3 per cent to $48.45 a barrel after falling 0.5 per cent on Friday.
Output falls in Nigeria, worries about political instability in Venezuela and long-term bar Goldman Sachs saying almost two years of oversupply in the market had ended supported crude oil, although rising OPEC output and a stronger dollar capped gains.
