Chinese data is better than expected, Asian stocks rise Reuters

Sano Hideyuki

TOKYO (Reuters)-Asian stocks rose on Thursday as economic data from China was largely more resilient than expected, and the Chairman of the Federal Reserve Board Jerome Powell said that there is still a period of time to withdraw from massive stimulus The way to go.

The MSCI Asia Pacific’s broadest index outside Japan rose 0.4%, and Hong Kong rose 1.0%.

The mainland stock market was basically flat, and the CSI 300 index was basically flat.

China’s economic growth rate in the second quarter was slightly lower than annual expectations, with GDP growth slowing to 7.9% from a record 18.3% in January-March. However, the 1.3% seasonally adjusted growth from April to June was slightly better than expected.

The June monthly data including retail sales, industrial output and fixed investment showed a slowdown in growth, but not as much as expected, adding to the view that policymakers may take more measures to support the recovery.

Earlier in the day, the People’s Bank of China partially extended its maturity one-year mid-term lending facility (MLF) loan, injecting 100 billion yuan ($15.46 billion).

After the People’s Bank of China said last week that it would reduce the cash reserves that banks must hold, starting Thursday, about 1 trillion yuan of long-term liquidity has also been released into China’s financial system.

Masahiko Loo, portfolio manager of AllianceBernstein (NYSE:), said: “In general, the People’s Bank of China is relaxing, but it is not flooding the banking system like the Fed. Today’s economic data is not that bad.”

Contrary to the trend, the Nikkei Index fell 0.9%, affected by concerns about the increase in domestic COVID-19 infections.

Wall Street stocks were mixed, with S&P closing up 0.12% and Nasdaq down 0.22%.

In his testimony to the US House of Representatives Financial Services Committee, Powell said that the US economy is “still a distance” from the level the central bank hopes to see before reducing monetary support.

He also stated that he believes that the recent price increase is related to the country’s reopening after the pandemic and will gradually fade away.

Before his comment, data released this week showed that consumer prices rose the most in 13 years in June, while producer price increases accelerated to the largest annual increase in more than a decade.

Chotaro Morita, chief interest rate strategist at SMBC Nikko Securities, said that Powell once again assured the market that the Fed will not be too tough in curbing inflation.

Global bond yields fell, with 10-year US Treasury yields falling to 1.336%, having reached a peak of 1.423% on Wednesday.

The yield on inflation-protected bonds (sometimes called the real yield) fell below minus 1.0%, close to the lowest level since February.

“Given that bond yields started to fall before Powell’s speech, the market may be driven more by short covering and closing of reduced positions than Powell’s comments themselves,” SMBC Nikko’s Morita also added.

In the currency market, Powell’s dovish stance suppressed the dollar.

The euro rebounded from a three-month low of $1.1772 on Wednesday to $1.1826. After falling 0.6% on Wednesday, the U.S. dollar exchange rate was 109.88 yen.

Three weeks after hitting 6.4508 overnight, Asia fell to 6.4693 against the US dollar.

Gold jumped to a one-month high of $1,829.8 per ounce on Wednesday, and finally closed at $1,826.1.

After the world’s major oil producers reached a compromise on supply issues and US data showed a slight decline in demand in the past week, oil prices fell. [EIA/S]

Futures fell 1.0% to US$72.40 per barrel, while futures fell 0.8% to US$74.18 per barrel.

($1 = 6.4693 Chinese yuan renminbi)