Asian Stocks Edge Ahead But China’s Covid Gloom Continues

 

Asia’s major markets gained some hard-earned ground on Monday but the mood remained unsettled across trading floors with China’s ongoing Covid battle casting a long shadow over the region.

Tokyo’s blue-chip shares advanced benefiting from a rebound in Wall Street in the previous session, but investors are on edge, closely watching developments in China. Hong Kong’s Hang Seng edged ahead too.

Mainland China stocks, though, ended down after data showed the country’s economic activity had cooled sharply in April due to its Covid lockdowns, with investors looking past Shanghai’s June reopening plan and a home-loan rate cut for first-time buyers.

 

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This comes as data shows new bank lending in China hit its lowest level in nearly four-and-a-half years in April, as the pandemic jolted the economy and weakened credit demand.

China’s April retail sales plunged 11.1% on the year, almost twice the fall forecast, as full of partial Covid lockdowns were imposed in dozens on cities. Industrial output dropped 2.9% when analysts had looked for a slight increase.

Shanghai has set out plans for return of more normal life from June 1 and for the end of a painful Covid lockdown that has lasted more than six weeks.

To prop up the property sector, the central bank cut the lower limit of interest rates on home loans for first-time purchasers by 20 basis points, based on Loan Prime Rates.

China’s blue-chip CSI300 index fell 0.8% to 3,956.54, while the Shanghai Composite Index was down 0.34% at 3,073.75.The Shenzhen Composite Index on China’s second exchange dropped 0.28% percent, or 5.44 points, to 1,926.01.

In Tokyo, the benchmark Nikkei 225 index firmed 0.45%, or 119.40 points, to 26,547.05, but the broader Topix index edged down 0.05%, or 0.94 points, to 1,863.26. The Hang Seng Index gained 0.26%, or 51.44 points, to 19,950.21.

Indian stocks advanced with Mumbai’s signature Nifty 50 index up 0.60%, or 94.30 points, at 15,876.45.

 

MSCI World Equity Index Flat

European stock indexes opened lower on Monday, after oil prices slid and riskier currencies took a hit during the Asian sessions as the weak economic data from China highlighted fears about a slowdown in growth.

Investors are worried that inflation pushing up interest rates will damage the global economy. These fears saw global shares hit their lowest point in 18 months last week.

The MSCI world equity index, which tracks shares in 50 countries, was flat on the day, but still holding above last week’s lows.

The dollar index, which last week surged to a 20-year high of 105.01, was down less than 0.1% on the day at 104.47. Riskier currencies such as the Australian dollar and British pound fell.

Oil prices slipped as investors took profit from a recovery in the previous session.

Bitcoin was trading at around $29,532. Last week it plunged to as low as $25,401.05 – its lowest since December, 2020. Already hurt by declining risk appetite, cryptocurrencies sold off last week when a popular stablecoin, TerraUSD, collapsed and lost its dollar peg.

 

Key figures

Hong Kong – Hang Seng Index > UP 0.2% at 19,940.28
Shanghai – Composite > DOWN 0.3% at 3,073.75 (close)
London – FTSE 100 > DOWN 0.4% at 7,389.93
Tokyo – Nikkei 225 > UP 0.5% at 26,547.05 (close)
West Texas Intermediate > DOWN 0.6% at $109.78 per barrel
Brent North Sea crude > DOWN 1.0% at $110.46 per barrel
New York – Dow > UP 1.5% at 32,196.66 (Friday close)

 

  • Reuters with additional editing by Sean O’Meara

 

Read more:

China Property Sales Plunge 46% in April, Most Since 2006

China Retail Sales Implode as Lockdowns Batter April Output

Sean O’Meara

Sean O’Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.