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China Stock Market Waiting On GDP Data

The China stock market has finished higher now in three straight trading days, rising more than 65 points or 2.9 percent in that span. The Shanghai Composite settled just above the 2,350-point plateau, and now traders are looking for continued support when the market opens on Friday - particularly following the release of key economic data in the morning.

The global forecast for the Asian markets is upbeat in anticipation of solid GDP data from China this morning. Also, the European Central Bank said that inflation in Eurozone is subject to upside risks and it is ready with all the tools necessary to address them "in a firm and timely manner." In corporate news, Internet giant Google Inc. said that its first quarter profit rose 61 percent from last year. The European and U.S. markets finished firmly higher, and the Asian bourses are expected to follow suit.

The SCI finished sharply higher on Thursday following gains from the property stocks and coal miners.

For the day, the index surged 41.94 points or 1.82 percent to finish at 2,350.86 after trading between 2,307.84 and 2,351.05 on turnover of 87.32 billion yuan. The Shenzhen Composite Index spiked 17.96 points or 1.9 percent to end at 945.33.

Among the gainers, Shenzhen Properties & Resources and Zhejiang Guangsha both surged by the 10 percent daily limit, while Shanghai Xinmei spiked 6.1 percent, Shenhua Energy climbed 2.3 percent, Yanzhou Coal jumped 4.1 percent and China Coal collected 2.3 percent.

The lead from Wall Street is positive as stocks extended gains from the previous session on Thursday, continuing to recover from the sell-off earlier in the week.

The support followed a Commerce Department report showing that the U.S. trade deficit narrowed to $46.0 billion in February from $52.5 billion in January. Economists had been expected a trade deficit of about $51.7 billion. The data indicated that trade wasn't as big of a drag on first quarter GDP growth as previously anticipated, and led Capital Economics to raise its first quarter GDP growth estimate to 2.5 percent from 2.0 percent.

Meanwhile, traders largely shrugged off a report from the Labor Department showing initial jobless claims rose to 380,000 in the week ended April 7 from the previous week's revised figure of 367,000. Economists had expected claims to edge up to 359,000 from the 357,000 originally reported for the previous week.

The Labor Department also reported that its producer price index was unchanged in March following a 0.4 percent increase in February, versus forecasts for an increase of 0.3 percent. Excluding food and energy prices, the core producer price index rose 0.3 percent in March after edging up 0.2 percent in February, in line with expectations.

In corporate news, shares of Sony (SNE) ended lower after the consumer electronics giant said it will cut about 10,000 jobs in fiscal 2012 as part of a turnaround plan.

The major averages closed firmly in positive territory, near their best levels of the day. The Dow jumped 181.19 points or 1.4 percent to finish at 12,986.58, while the NASDAQ surged 39.09 points or 1.3 percent to 3,055.05 and the S&P 500 soared 18.86 points or 1.4 percent to 1,387.57.

In economic news, China is on Friday scheduled to release Q1 GDP plus March figures for retail sales, industrial production and fixed asset investment. GDP is expected to rise 1.9 percent on quarter and 8.4 percent on year after rising 2.0 percent on quarter and 8.9 percent in the previous three months. Retail sales are tipped to add 15.0 percent on year after collecting 18.1 percent in February. Industrial production is called higher by 11.5 percent on year after climbing 21.3 percent in the previous month. FAI is called higher by 20.8 percent after rising 21.5 percent a month earlier.

Also, the World Bank on Thursday lowered China's growth estimate for 2012 to 8.2 percent from 8.4 percent. The prospects for a gradual adjustment of growth remain high, the Washington-based lender said in its China Quarterly Update. For 2013, economic growth is seen at 8.6 percent.

"China's gradual slowdown is expected to continue into 2012, as consumption growth slows somewhat, investment growth decelerates more pronouncedly and external demand remains weak," said Ardo Hansson, lead economist for China. "The risks of overheating are moderating, increasing the prospects to achieve a soft landing."

Also, the outlook for China's banking sector is stable, Moody's Investors Service said in its China's Banking System Outlook report on Thursday. The stable outlook suggests that the economy will grow in a 7.5 percent - 8.5 percent range, which is representative of a "soft landing", and consistent with an environment that will allow China's banks to maintain profitability and manage a likely gradual rise in credit costs.

In a separate report, the rating agency said the outlook for Hong Kong's banking system is also stable. Hong Kong banks' credit ratings continued to be supported by their solid financial fundamentals, with sound capitalization, good profitability, and maintenance of strong asset quality metrics.

Also, Chinese banks extended CNY 1.01 trillion new loans in March, data from the People's Bank of China showed Thursday. March's lending was well above the consensus forecast of CNY 797.5 billion. The broadest measure of money supply, M2 rose at a pace of 13.4 percent year-on-year in March. Economists were expecting the growth rate to remain steady at 13 percent. China's foreign exchange reserves, the world's largest, rose to $3.31 trillion at the end of March, from $3.18 trillion at the end of December.

by RTT Staff Writer

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