China Stocks Rebound On Economic Optimism, Japan Stocks Jump Ahead of Rate Decisions

Arjun Pandit
18 Mar, 2024
Mumbai

Asian stock markets advanced after China reported better-than-expected retail sales, fixed investment, and industrial output in two-month period to February.  

Benchmark indexes in Tokyo advanced ahead of the monetary policy announcements by the Bank of Japan at the end of its two-day meeting on Tuesday. 

The Nikkei 225 Stock Average gained 2.5% to 39,665.98, and the Topix index added 1.9% to 2,720.33. 

Investors are hoping that the Bank of Japan will announce its plans to end the negative interest rate regime and adjust the yield curve to arrest the widening rate gap with the U.S.

Moreover, strong wage increases for the second year in a row agreed upon by large corporations during the annual negotiations with the labor unions also raised hopes that the Bank of Japan may be nearing the end of its ultra-loose monetary policy. 

The yen eased against the U.S. dollar to 149.16 ahead of the rate decision on Tuesday. 

Tech stocks led the gainers in Tokyo trading, and Advantest, Tokyo Electron, Screen Holdings, and Disco Corp. jumped between 2% and 4%. 

Vehicle makers were also among the leading gainers, and Toyota Moto, Honda Motor, and Nissan Motor advanced between 1% and 2%. 

Banks also participated in the market rally in the hope of a rise in interest rates and a change in yield curve management policy. 

Mitsubishi UFJ, Sumitomo Mitsui Financial, and Mizuho Financial advanced between 1.4% and 2.5%. 

 

China Stocks Rebound 

Market indexes in Shanghai and Hong Kong advanced following better-than-expected economic data in January and February. 

China releases key economic data for two months combined to smooth out the calendar shift because of the Lunar Holidays. 

The CSI 300 index gained 0.7% to 3,595.09, and the Hang Seng index advanced 0.2% to 16,751.31.

Property developers extended losses from the previous week after construction investment declined in the two-month period. 

Longfor Group, China Resources Land, China Vanke, and Sun Hung Kai Properties fell between 2% and 4%. 

 

China's Industrial Output, Retail Sales and Fixed Investment Data Ahead of Expectations 

China's fixed investment, retail sales, and industrial output gathered speed in the first two months of 2024, driven in part by the economic stimulus provided in October. 

China's industrial output increased 7.0% for the two-month period ending in February from a year ago, faster than 5.8% in December, the National Bureau of Statistics reported Monday. 

Manufacturing accelerated to 7.7% growth from 7.1% in December, utility output increased at a faster pace of 7.9% from 7.7%, while production at mines slowed to an increase of 2.3% from 4.7% a year ago. 

China is struggling to revive its industrial output amid a fragile economic recovery from the coronavirus pandemic. 

Fixed asset investment increased 4.2% from the previous year in the two-month period to February, despite the sharp decline in real estate investments. 

Real estate investment contracted by 9.4% in the period compared to a 9.6% decline in the corresponding period a year ago. 

But investment in electricity, gas, water, and heat jumped 25.4%, and in the mining sector, it advanced 14.4%. 

China's consumer demand recovery has also been slower than anticipated by a wide margin because of the protracted weakness in the property market and economic uncertainties. 

Retail sales increased 5.5% in the period, slower than the 7.4% rebound in December. largely reflecting a higher base last year after consumer spending surged following the ending of the coronavirus lockdown. 

China's jobless rate increased to a 7-month high of 5.3% in February from 5.2% in January, the National Bureau of Statistics reported Monday. 

The jobless rate in 31 large cities and towns was estimated at 5.1%. 

The statistical bureau said youth unemployment data for February will be released later in the week, and January's modified jobless rate stood at 14.6% in the 16–24 age group. 

China's economic data is generally viewed with skepticism by most international observers for its lack of transparency and widespread practice of generating data to satisfy goals set by political leaders. 

 

India's Overall Trade Deficit Plunged  

Stocks in Mumbai lacked direction in early trading as investors awaited rate decisions from major central banks this week. 

The Sensex and the Nifty indexes traded around the flatline, and investors turned cautious in Monday's trading after volatile sessions in two consecutive weeks in a row. 

Moreover, investors reviewed the international trade balance data for February, released late Friday by the Ministry of Commerce and Industry. 

Overall exports in the month increased 14.2% from a year ago to $73.55 billion, while imports jumped 10.1% to $75.50 billion, driving the overall trade deficit down 53% to $1.95 billion from $4.15 billion. 

Goods exports rose 11.9% to $41.4 billion from $37.01 billion, and imports jumped 12.1% to $60.1 billion from $53.6 billion, widening the trade deficit by 6.8% to $18.7 billion from $17.5 billion. 

Gold imports surged 133% from a year ago to $6.2 billion amid rising demand ahead of the wedding season. 

The Sensex index decreased 0.1% to 72,556.30, and the Nifty index edged down 0.2% to 21,973.40. 

On the Mumbai stock exchange, 60 stocks traded at their 52-week highs and 29 stocks traded at their 52-week lows.