China outperforms Asian shares on solid trade data, BOE in focus

China outperforms Asian shares on solid trade data, BOE in focus

By Stella Qiu

SYDNEY (Reuters) -Asian shares were mixed on Thursday but solid Chinese trade data helped China stocks outperform, while the yen stabilised after three days of decline as Japanese authorities hinted at the potential for currency intervention.

Europe looked set for a subdued open, with EUROSTOXX 50 futures flat, although the FTSE 100 was up 0.1% ahead of an interest rate decision from the Bank of England later in the global day.

All eyes are on the prospects of a June rate cut following the overnight move by Sweden’s Riksbank to cut rates, which underlined Europe’s divergence from the U.S. Federal Reserve as investors awaited U.S. consumer inflation data due on Wednesday.

MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.2% but was hovering not far from a 15-month high hit earlier in the week after Fed Chair Jerome Powell reiterated a stance for policy easing later this year.

Chinese customs data showed that imports jumped 8.4% in April from a year earlier, beating expectations for a rise of 4.8%, while exports returned to growth, meeting forecasts, in a boost to economic growth.

That helped Chinese shares build on earlier gains, with blue-chip stocks rising 0.9% and Hong Kong’s Hang Seng index increasing 1.2%. News that China’s eastern metropolis Hangzhou will lift all home purchases restrictions in the ailing property sector, a key pillar of domestic demand, also boosted sentiment.

Property shares surged 2.5% as a result.

“For imports, strength was heavily concentrated in a few categories. The main theme in our view is the goal to compete in the AI race,” said Lynn Song, chief economist, Greater China, at ING, adding that imports of data-processing equipment and integrated circuits have been strong.

“Considering import demand could remain resilient but exports face a higher level of risk in coming months, we expect a smaller contribution from trade to (economic) growth starting in the second quarter.”

In other markets, Japan’s Nikkei reversed earlier gains to be off 0.2%. Australia’s resources-heavy share market lost 1.1% while South Korea also retreated 1%.

Nasdaq stock futures eased 0.2%, dragged lower by Uber (NYSE:UBER), which fell 5.7% overnight as the ride-sharing company issued a downbeat forecast after a surprise quarterly loss.

The Japanese yen steadied at 155.60 per dollar after falling for three sessions. It rose more than 3% last week with market participants pointing to likely intervention by Japanese authorities twice to stem its fast decline. [FRX/]

On Thursday, Japan’s top currency diplomat Masato Kanda said there is no limit for reserves in currency intervention, keeping traders on edge, while minutes from the Bank of Japan’s April meeting showed policymakers turned overwhelmingly hawkish, helping the yen steady.

However, Japan’s real wages in March fell 2.5% from a year earlier, marking the second year of decline, an argument for policymakers to not hike aggressively.

In the Treasuries market, yields were little changed after edging up the day before, with movement likely to be muted ahead of the U.S. inflation report next week. Two-year yields held at 4.8511%, while the 10-year yield was at 4.5062%, having risen 3 basis points overnight to 4.4920%.

Oil prices were higher on Thursday, having bounced off two-month lows the previous session. Brent futures rose 0.4% to $83.91 a barrel, while U.S. crude gained 0.5% to $79.40 a barrel. [O/R]

Gold prices were 0.3% higher at $2,316.23 per ounce.

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