Japan Narrowly Avoided Recession After GDP Growth Revised Higher, China's Inflation Rebounded

Arjun Pandit
11 Mar, 2024
Mumbai

Asian markets traded mixed in Monday's trading, and tech stocks led the indexes in Tokyo and Mumbai lower, but the benchmark indexes in China edged higher after the release of inflation data. 

 

Nikkei In Tokyo Dropped 2%, Q4 GDP Revised Higher 

Stocks in Tokyo dropped sharply following the weakness in tech stocks in Friday's trading in New York. 

Profit-taking sentiment dictated market volatility, and the Japanese yen strengthened against the U.S. dollar after the fourth quarter. GDP was upwardly revised and stoked speculation that the Bank of Japan is likely to end its ultra-loose monetary policy at the end of its policy meeting on March 19. 

Japan's fourth-quarter GDP growth was revised to an increase of 0.1% from the preliminary estimate of a decline of 0.1%, avoiding a technical recession after contracting 0.8% in the third quarter. Japan's Cabinet Office reported Monday. 

On an annualized basis, GDP increased 0.4% after slumping 2.9% in the three months prior. GDP capital expenditure was up 2.0 percent on the quarter after declining 0.4% in the third quarter. 

The Nikkei 225 Stock Average declined 2% to 38,868.10, and the Topix index dropped 2.2% to 2,666.72. 

Tokyo Electron, Disco Corp., SoftBank, Advantest, and Screen Holdings declined between 3% and 5%. 

Sumitomo Mitsui Financial, Mizuho Financial, and Mitsubishi UFJ Financial declined more than 3%.

 

Inflation Rebounded and Foreign Investments Lift China Stocks Higher

Stocks in Shanghai and Hong Kong advanced on the hopes that demand conditions are recovering after the rebound in inflation. 

Market sentiment was also bolstered by a net inflow of $9.6 billion of funds in Chinese stocks in February, reversing a net outflow in the previous six months in a row, according to the Institute of International Finance. 

China's consumer price inflation rebounded to an increase of 0.7% in February after a 14-year steep decline of 0.8% in January, the National Bureau of Statistics reported over the weekend. 

The shifting lunar holiday calendar also played a role in the rebound in inflation following the early arrival of the annual holidays last year. 

Property developers declined after the housing minister confirmed that the government is prepared to let some developers go bankrupt for a lack of financial viability. 

The CSI 300 index increased 0.4% to 3,559.88, and the Hang Seng index added 1.1% to 16,548.22. 

Longfor Group, China Vanke, China Resources Land, Henderson Land Development, and Sun Hung Kai traded down but managed to recover in the afternoon trading. 

Longfor Group traded higher by 0.5% to HK$9.43, despite the property developer saying its annual profit declined by as much as 50% in the last year.

Alibaba Group, Tencent Holdings, JD.com, Meituan, and Baidu advanced between 2% and 4% following the bargain hunting for foreign investors. 

 

India indexes track lower global markets. 

The Sensex index decreased 0.2% to 73,952.93, and the Nifty index fell 0.2% to 22,458.20.

On the Mumbai stock exchange, 160 stocks traded at their 52-week highs and 57 stocks traded at their 52-week lows.

The yield on the 10-year Indian government bonds increased to 7.05%, and the Indian rupee strengthened to ₹82.82 against the U.S. dollar.

Stocks in Mumbai headed lower in Monday's trading, and investors reacted to local corporate news amid global markets. 

The Sensex and the Nifty indexes dropped more than 0.1% in early trading on global interest rate uncertainties compounded by high valuations in local markets.

Market indexes struggled after extending weekly gains for the seventh week in a row, and international crude oil prices hovered near two-week lows on the ongoing demand growth worries in China and rising supplies in the U.S.