SYDNEY (Reuters) – Asian shares advanced on Monday as investors breathed a sigh of relief after encouraging Chinese data suggested the world’s second-biggest economy may be starting to stabilize thanks to ramped-up stimulus from Beijing.
Second quarter economic growth slowed to 6.2% in the second quarter from a year earlier, the weakest pace in at least 27 years while separate data showed the country’s industrial output and retail sales handily topped forecasts.
The promising monthly activity data suggested a flurry of stimulus measures from China have been able to prop-up domestic activity and offset some of the damage from a protracted trade war with the United States, analysts said.
Equity markets were choppy in the wake of the Chinese data as some expected Beijing might temper further stimulus.
MSCI’s broadest index of Asia-Pacific shares outside Japan gave up losses to be 0.2% higher at 526.72 points. It fell a little more than 1% last week, snapping five straight weeks of gains.
Trading was expected to be light as Japan was shut for a public holiday.
Australian shares slipped 0.4% while South Korea’s KOSPI was mostly flat. Chinese shares pared early losses with the blue-chip index up 0.4%. Hong Kong’s Hang Seng index added 0.3%.
“Investors may be scaling back easing expectation upon today’s data as fiscal measures appear to be working,” said Westpac analyst Frances Cheung.
“That said, we believe the PBoC will still be supportive of liquidity. Expect yields to be stable and any temporary bearishness to be expressed via swaps.”
Later in the week, U.S. retail sales and industrial production data will provide more clues about the health of the world’s largest economy. The U.S. Federal Reserve will release its ‘Beige Book’ on Wednesday which investors will scour for comments on how trade tensions were affecting business outlook.
In currency markets, the Australian dollar, often played as a liquid proxy for the Chinese yuan, jumped after the data to a high of $0.7033, a level not seen since July 4.
