Chinese data leads Asian region higher

A positive read on Chinese GDP and better than expected jobs data from South Korea helped Asian stocks halt a two-day decline. The MSCI Asia Pacific Index rose 0.4% as of 11:04 a.m. in Tokyo. Standard & Poor’s 500 Index futures added 0.2% and Treasuries halted a three-day rally. Japan’s Nikkei 225 Stock Average was little changed and South Korea’s Kospi Index increased 0.5%. China’s Shanghai Composite Index rose 0.7%.

China’s 2Q GDP grew by 9.5% year-on-year, slightly exceeding market estimates of 9.4%. Those fearing a hard landing will be disappointed. Perhaps more importantly, the composition of Chinese GDP shows some very positive trends. Industrial output firmed by an impressive 15.1% while retail sales jumped by 17.7%. Inflation adjusted urban per-capita disposable incomes were up 7.6% from a year earlier in real terms in the first half, real rural per-capita cash incomes were up 13.7%. The numbers come despite severe weather impacts – flooding in the south and drought to many parts of the north.

News was also positive out of South Korea. The jobless rate was at 3.3% in June, unchanged from May, Statistics Korea said today. Sustained job growth is fueling inflation that’s exceeded the central bank’s target since January, prompting the bank to raise the benchmark interest rate three times this year. The Finance Ministry said on June 30 that the nation may add 330,000 jobs this year, more than the earlier estimate of 280,000.

Also in the region, Indian stocks climbed, halting a three-day decline, as overseas investors bought shares after valuations approached a two-year low and a drop in industrial output prompted speculation the central bank will pause after the longest stretch of rate increases in a decade. DLF Ltd. – the nation’s biggest property developer – advanced 1.6%. Mahindra & Mahindra – the largest maker of sport- utility vehicles and tractors added 1.4%.

Inflation remains a key regional theme. The Reserve Bank of India meets on July 26 to set policy after raising rates 10 times since March last year to rein in prices, joining countries including China and South Korea in battling accelerating living costs. The country’s inflation rate quickened to 9.06% in May from 8.66% in April. The government releases June price figures tomorrow, as well as food-cost data for the week ended July 2.