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

Bob Mason
Published: Mar 18, 2024, 02:34 GMT+00:00

Key Points:

  • On Monday, the Chinese economy was in the spotlight, with economic indicators for January and February supporting riskier assets.
  • Machinery orders from Japan were disappointing as the Bank of Japan kicked off the March monetary policy meeting.
  • Reducing bets on an H1 2024 Fed rate cut overshadowed BoJ plans to exit negative rates, supporting gains for the USD/JPY and a Nikkei breakout.
Asia Market News

In this article:

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%.

ASX 200 recovers early losses.
ASX200 Daily Chart 180324

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

Hang Seng pressured by real estate stocks.
Hang Seng Index Daily Chart 180324

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.

A graph of stock market Description automatically generated

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.

A graph of stock market Description automatically generated

About the Author

Bob Masonauthor

With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.

Did you find this article useful?