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James Hyerczyk
Asia Pacific Shares

The major Asia-Pacific stock indexes closed mixed on Friday as investors showed limited reaction to data that showed China’s industrial output bounced back more than expected in April.

China’s industrial output rose 3.9% year-on-year in April, according to data released Friday by the country’s National Bureau of Statistics. That marked the first expansion in the metric for this year from China. Analysts in a Reuters poll had expected industrial output for April to rise 1.5%. Retail sales, however, fell 7.5% in April. That was a larger fall than the 7% decline forecast, according to Reuters.

On Friday, Japan’s Nikkei 225 Index settled at 20037.47, up 122.69 or +0.62%. Hong Kong’s Hang Seng Index finished at 23797.47, down 32.27 or -0.14% and South Korea’s KOSPI Index closed at 1927.38, up 2.32 or +0.12%.

In China, the Shanghai Index settled at 2868.46, down 1.88 or -0.07% and Australia’s S&P/ASX 200 Index finished at 5404.80, up 76.10 or +1.43%.

In other news from China, Fixed Asset Investment fell 10.3%, worse than the -9.8% forecast. Retail Sales fell 7.5%. Economists predicted a 5.9% loss. The Unemployment Rate came in at 6.0%. The estimate was 5.8%.

US-China tensions Rattle Sentiment

Asian shares may have finished mixed on Friday, but closed the week lower as deteriorating U.S.-China relations added to uncertainties over how fast economies can recover as they start to emerge from lockdown.

Worries about confrontations between the two largest economies in the world eclipsed Chinese economic data, which showed its economy is gradually recovering from the shock of the coronavirus outbreak.

With China the first to relax lockdowns, global investors are closely watching it for clues on how long demand will take to bounce back, as other countries begin to ease their own anti-virus measures.

Investors are becoming increasingly worried about rising U.S.-China tensions. U.S. President Donald Trump blames China for its handling of the COVID-19 disease that has killed more than 85,000 Americans.

Trump signaled a further deterioration of his relationship with China by saying he has no interest in speaking to President Xi Jinping right now.

He went so far as to suggest he could even cut ties with the world’s second-largest economy, a day after the U.S. federal pension fund delayed investment in Chinese shares in the wake of pressure from the White House.

The move fanned fears the confrontation between Washington and Beijing could escalate beyond trade to finance and other areas.

“The U.S.-China trade war was the biggest theme for markets last year. It will be a big concern if the conflict escalates beyond trade,” said Takeo Kamai, head of execution at CLSA.

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