Chinese trade data supports Asian equities

Sydney — Asian shares steadied on Thursday after solid Chinese trade data added to signs domestic demand in the world’s second-largest economy is picking up, while the yen stabilised after three days of declines as Japan talked up potential currency interventions.

Later in the day, the Bank of England (BOE) will decide its interest rate policy, with all eyes 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 US Federal Reserve.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.1%, 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 in 2024.

Investors will be focusing on the US consumer inflation data for April due next Wednesday after three straight prints of upside surprises for a better sense of the direction of the Fed’s policy.

Chinese customs data showed that imports jumped 8.4% in April from a year ago, beating the expectation for a rise of 4.8%, while the gain in exports met forecasts.

That helped Chinese shares build on earlier gains, with blue-chip stocks rising 1% and Hong Kong’s Hang Seng index increasing 1.2%.

Japan’s Nikkei rose 0.5%. Nasdaq stock futures eased 0.1%, dragged lower by Uber, which fell 5.7% overnight as the ride-sharing company issued a downbeat forecast after a surprise quarterly loss.

“A first rate cut by the Riksbank has not been enough to further push the bullish sentiment. Eyes are on the Bank of England,” said analysts at ING in a note to clients.

“Since Powell’s dovish stance just last week, markets will listen carefully for a similar direction as the Fed. This also means that markets may face a surprise if a similar turn towards more dovishness is not reflected in this BOE meeting.”

The Japanese yen steadied at ¥155.55 to the dollar after falling for three sessions. It rose more than 3% last week after Japanese authorities likely intervened in the market twice to stem its fast declines.

On Thursday, the top currency diplomat Masato Kanda said there was 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 declines for two years, an argument for policymakers to not hike aggressively.

In the treasuries market, yields were little changed after edging up the day before, with movements likely to be muted ahead of the US inflation report next week. Two-year yields held at 4.8470%, while the 10-year yield was at 4.5003%, having risen three basis points (bps) overnight.

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 US crude gained 0.5% to $79.40 a barrel.

Gold prices were 0.1% higher at $2,311.23/oz.

Reuters