Chinese numbers help snap losing streak

<p>Asian stocks snapped a prolonger losing streak last week while the Australian and New Zealand dollars strengthened after economic reports today showed China’s expansion remains […]</p>

Asian stocks snapped a prolonger losing streak last week while the Australian and New Zealand dollars strengthened after economic reports today showed China’s expansion remains steady. Chinese inflation grew 5.5% in May, in line with most estimates and above April’s 5.3%. The market was more pleased with the level of production (industrial output), up 13.3% which was above consensus estimates of 13.1%. While the inflation rate is still above the 4% target range, the Chinese economy is still growing at a healthy rate so real growth – adjusting for inflation – is still very healthy and should meet estimates for 2011 despite a string of bad global data last week.  

The MSCI Asia Pacific Index added 0.6% at noon in Tokyo. About five shares gained for every three that declined on MSCI’s Asia Pacific index, helping the gauge rebound from its lowest level in almost three weeks. Japan’s Nikkei 225 Stock Average added 0.2% and South Korea’s Kospi index gained 1.2%. China’s Shanghai Composite Index jumped 1%. Standard & Poor’s 500 Index futures gained 0.5%. 

The Australian dollar erased an earlier loss while the kiwi climbed 0.3%. Earthquakes that struck Christchurch yesterday may add to the case for New Zealand’s central bank Governor Alan Bollard to delay interest-rate increases until next year. The magnitude 5.2 and magnitude 6 tremors in New Zealand’s second-biggest city were the worst since a February temblor that killed more than 180 people and closed the central business district. The Euro fell against 13 of its 16 major peers on concern European Union finance ministers meeting today will struggle to resolve the debt crisis in Greece. Crude slid 0.1% in New York, trimming a drop of as much as 0.8%.

In corporate news, Tokyo Electric Power jumped 19% after the company said it’s preparing compensation for victims of the Fukushima Dai-Ichi nuclear plant disaster after Japan’s cabinet today approved a bill to help the utility meet payments. Hankook Tire- South Korea’s largest tiremake – advanced 7.4%, rebounding from yesterday’s 8.2% slump. Korea Investment & Securities said in a report that yesterday’s decline, triggered by concern about a recall in China, was “overdone.” In Australia, Insurance Australia Group (IAG) reaffirmed guidance at its investor day presentation but left the door open for a potential downgrade following yesterday’s Christchurch earthquake. There was also more M&A talk this morning in Sydney over Lend Lease interest in Centro, one which seems to make strategic sense. Centro assets will benefit from Lend Lease’s development expertise and newly integrated infrastructure arm through Valemus. 

In commodities, Crude fell 0.1% to $97.17 a barrel on the New York Mercantile Exchange, after earlier dropping to $96.55. Futures retreated 2% yesterday to the lowest settlement since May 17. Crude stockpiles probably fell 1.75 million barrels, the survey shows. Corn lost 0.9% to $6.985 a bushel. Cash silver gained 0.9% to $35.08 an ounce, rebounding from a two-day, 7.4% plunge.

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.