Asia Market News: China Data Beats Forecasts with the Nikkei on a Pre-Pivot Rally

Economic Data from China Raise Demand for Fiscal Stimulus Measures

On Monday, the Chinese economy was in the spotlight. Industrial production, retail sales, unemployment, and fixed asset numbers (Jan-Feb) warranted investor interest. The numbers are year-on-year and for January and February combined.

• Industrial production increased by 7.0% after advancing by 6.8% in December. Economists forecast industrial production to increase by 5.0%.
• Retail sales rose by 5.5% after increasing by 7.4% in December. Economists forecast retail sales to advance by 5.2%.
• Fixed asset investments increased by 4.2% after rising 3.0% in December. Economists expected an increase of 3.2%.
• The unemployment rate rose from 5.1% to 5.3% in February. Economists predicted the unemployment rate would remain at 5.1%.

The January-February figures provided relief after Beijing disappointed the markets with the lack of fiscal policy measures to bolster the economy. The economic indicators for January and February combined may also ease questions about the 5% growth forecast for 2024.

Riskier assets reacted to the numbers. The Hang Seng Index was down 0.31% to 16,670, with the ASX 200 declining by 0.02% to 7,669. Economic indicators from China supported a recovery from early Monday session lows.

The economic indicators from China influenced ASX-listed mining stocks, which had been under pressure on iron ore price trends.

Rio Tinto Ltd. (RIO) and BHP Group Ltd (BHP) recovered from early losses, rising by 0.32% and 0.12%, respectively. Fortescue Metals Group Ltd. (FMG) declined by 0.50%.

However, real-estate stocks continued to pressure the Hang Seng Index. The Hang Seng Mainland Properties Index (HSMPI) was down 1.47%.

USD/JPY Awaits the Bank of Japan Monetary Policy Decision

On Monday, the Bank of Japan monetary policy meeting got underway. The markets expect the BoJ to exit negative rates on Tuesday. Wage negotiations greenlit a BoJ pivot, with Rengo, the Japanese Trade Union Confederation (JTUC), reporting wage hikes averaging 5.28%, the most marked wage increase in 33 years.

However, macroeconomic indicators from Japan raised uncertainty about the timeline for a BoJ pivot. Machinery orders slid by 1.7% month-on-month in January after rising by 2.7% in December.

On Monday, the USD/JPY was up 0.12% to 149.171 on falling Fed interest rate cut bets.

However, the USD/JPY return to the 149 handle drove buyer demand for Nikkei-listed stocks. The Nikkei was up 2.13% to 39,532.