Asian markets rise as China economy grows

Shanghai — Asian shares rose on Friday after global stock indices and Wall Street posted more records, and as China’s economic growth matched expectations in spite of US trade pressures.

The world’s second-largest economy grew 6.0% in the fourth quarter of 2019 from a year earlier, and 6.1% for the full year, official data showed on Friday.

While China’s growth in 2019 was the slowest pace of economic expansion in 29 years, held back by anaemic domestic demand and the damaging trade war with the US, it was in line with analyst expectations and within the government’s official target.

“This is all good news and positive for the China story. All the data coming out, from industrial production, fixed asset to retail sales, they are all showing signs of bottoming out as the trade cycle bottoms out,” said Daniel Gerard, senior multi-asset strategist at State Street Global Markets in Hong Kong.

Recent data has pointed to an improvement in Chinese manufacturing and business confidence as trade tensions eased, but analysts are not sure if the gains can be sustained and Beijing is widely expected to roll out more stimulus measures.

MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.1%.

China’s blue-chip CSI300 index was 0.27% higher, extending a rally fuelled by hopes for improving relations with the US that has seen it gain 9% since the beginning of December.

Australian shares added 0.47% after setting four consecutive record closing highs in previous days and Seoul’s Kospi rose 0.12%. Japan’s Nikkei was up 0.49% after touching 15-month highs earlier in the session.

MSCI’s global share index touched new highs and was last up 0.03%.

But analysts say global equities may find it difficult to maintain momentum from their recent rally as optimism over the US-China trade truce gives way to uncertainty over the next steps in trade talks.

While a phase 1 deal signed by China and the US on Wednesday is seen as defusing the 18-month row that has hit global growth, experts say it is unlikely to provide much balm for broader frictions between the two countries. Most of the tariffs imposed during the dispute remain in place and a number of thorny issues that sparked the conflict are still unresolved.

“The challenge from here is how long we can maintain these improvements,” said Steven Daghlian, market analyst at CommSec in Sydney.

“Speaking of the Aussie market specifically, a 6% gain in two weeks is obviously a huge challenge to replicate in the tail end of the month. You don’t really see 10, 11, 12% improvements over the course of a month without any gigantic positive catalysts.”

In the US on Thursday, a combination of upbeat earnings from Morgan Stanley, rising US retail sales, a strong labour market and robust manufacturing data helped to lift Wall Street to record highs.

The phase 1 deal and the US Senate’s approval of a revamp to the 26-year-old North American Free Trade Agreement also boosted investor spirits.

The Dow Jones Industrial Average rose 0.92% to 29,297.64, the S&P 500 gained 0.84% to 3,316.81 and the Nasdaq Composite added 1.06% to 9,357.13.

The US data supported the dollar, which held steady on Friday. The greenback hit eight-month highs against the yen before trimming its advance to rise 0.05% to 110.20/$. The euro was little changed at $1.1136.

The dollar index, which tracks the greenback against a basket of six major rivals, was a tick lower at 97.319.

The rally in equities was mirrored in US benchmark 10-year Treasury notes, which saw yields rise to 1.8266% from their close on Thursday at 1.809%. Yields rise as prices fall.

Commodity markets were quiet, with Brent crude futures adding just 3c to $64.58 per barrel. US West Texas Intermediate crude futures were also 3c higher at $58.55 per barrel.

Gold added 0.05% to $1,553.35/oz on the spot market.

• With Noah Sin in Hong Kong

Reuters