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Asian Shares Finish Week Higher on Back of Trade Deal, Strong Chinese Industrial, Retail Data

The Shanghai Composite rallied last week as growth in China’s industrial and retail sectors beat expectations in November, as government support propped up demand in the world’s second-largest economy and amid easing trade hostilities with Washington.
James Hyerczyk
Asian Shares

Asia Pacific shares were mostly higher last week. After a slow start, the markets edged mostly higher throughout the week as investors followed Wall Street’s lead. Asian markets initially had a mixed reaction to news that China and the U.S. announced they were finally set to sign off on phase one trade agreement.

For the week, Japan’s Nikkei 225 Index settled at 23816.63, down 206.47 or -0.86%. South Korea’s KOSPI Index finished at 2204.18, up 33.93 or +1.56% and Hong Kong’s Hang Seng Index closed at 27871.35, up 183.59 or +0.66%.

China’s Shanghai Index settled at 3004.94, up 37.26 or +1.26% and Australia’s S&P/ASX 200 finished at 6816.30, up 76.60 or +1.14%.

China’s Factory, Retail Sectors Shine as Trade Tensions Ease

The Shanghai Composite rallied last week as growth in China’s industrial and retail sectors beat expectations in November, as government support propped up demand in the world’s second-largest economy and amid easing trade hostilities with Washington.

Industrial production rose 6.2% year-on-year in November, data from the National Bureau of Statistics showed, beating the median forecast of 5.0% growth in a Reuters poll and quickening from 4.7% in October. It was also the fastest year-on-year growth in five months.

Retail Sales rose 8.0% year-on-year in November, compared with an expected 7.6%, buoyed by stimulus measures and the November Singles Day shopping extravaganza, the statistics bureau said.

Aussie Shares Boosted by Chinese Reports, RBA Minutes, Jobs Data

Shares in Australia were mostly supported by the better-than-expected economic news out of China and the somewhat dovish Reserve Bank minutes, but dipped a little on stronger-than-expected jobs data.

Minutes from the Reserve Bank of Australia’s (RBA) December meeting, where the central bank opted to leave the cash rate unchanged at 0.75%, showed it was “prepared to ease monetary policy further if needed.” Lower rates tend to boost stocks.

Australian jobs data for November released Thursday showed a 39,900 seasonally adjusted rise in jobs, far higher than expectations of a 14,000 increase by a Reuters poll. The seasonally adjusted unemployment rate also came in lower than expected at 5.2%, as compared to a 5.3% forecast by a Reuters poll. Stocks dipped a little on the news because it trimmed the chances of an RBA rate cut in February.

BOJ Decision, NAFTA Pressure Japanese Shares

Shares in Japan were lower after the Bank of Japan (BOJ) kept monetary policy steady and the U.S. House of Representatives passed a new North American trade deal.

In its statement, the BOJ said:  “Japan’s economy is likely to continue on a moderate expanding trend, as the impact of the slowdown in overseas economies on domestic demand is expected to be limited, although the economy is likely to continue to be affected by the slowdown for the time being.”

Japanese auto shares took a tumble in response to the new North American trade deal. The new deal included a requirement that 75% of auto parts come from North America, up from the previous 62.5% required by the previous NAFTA.

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