SHANGHAI, Oct 19 — Asian shares rose for a second session today as a barrage of Chinese data confirmed the economy had stabilised on the back of government spending and a hot housing market, even if worries about debt continue to mount.
The initial reaction was muted with few fireworks in the figures and Shanghai stocks edged up 0.2 per cent.
MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.4 per cent, on top of yesterday’s 1.4 per cent jump.
Australian shares firmed 0.4 per cent, while Japan’s Nikkei rose 0.2 per cent.
Chinese gross domestic product (GDP) expanded 6.7 per cent in the year to September, exactly as forecasted. Private investment remained subdued with government spending and property strong.
Other data showed retail sales rising a solid 10.7 per cent and urban investment 8.2 per cent, but industrial output disappointed by growing only 6.1 per cent.
“The upshot from today’s data is that economic activity seems to be holding up reasonably well, with few signs that a renewed slowdown is just around the corner,” said Julian Evans-Pritchard, China economist at Capital Economics.
“Nonetheless, the recent recovery is ultimately on borrowed time given that it has been driven in large part by faster credit growth and a property market boom, both of which policymakers are now working to rein in.”
Sentiment had got an early lift from Wall Street which benefited from encouraging corporate earnings. The Dow ended yesterday up 0.42 per cent, while the S&P 500 added 0.62 per cent and the Nasdaq 0.85 per cent.
Of the 52 S&P 500 companies that have reported results to date for the third quarter, 81 per cent had earnings that topped average analyst estimates, according to forecasts collated by Thomson Reuters I/B/E/S.
One company seemingly disappointing investors was Intel, which slid 5.4 per cent after the bell despite beating expectations on its earnings.
Pound up amid Brexit confusion
A report on US consumer prices showed underlying inflation moderated slightly in September to 2.2 per cent, leading the market to slightly pare back bets on a December rate hike.
Fed fund futures imply around a 65 per cent probability of a move, down from 70 per cent.
Federal Reserve Chair Janet Yellen said last week the US central bank could allow inflation to run above its target.
US Treasury yields dipped, in line with their UK counterparts, amid confusion on whether parliament will have to ratify Britain’s exit from the European Union.
British lawmakers are seen as less inclined to take a hard line on Brexit than Prime Minister Theresa May.
The news headlines caught the market very short of sterling and left the pound up at US$1.2291, after a rally of 1 per cent yesterday.
The dollar was steady on the yen at 103.82, after edging back from 104.20 the previous session. Against a basket of currencies it dipped 0.1 per cent to 97.809.
The euro remained vulnerable at US$1.0987ahead of tomorrow’s meeting of the European Central Bank where some investors wager President Mario Draghi will push back against talk of a tapering in its asset buying.
In commodity markets, oil prices extended gains as an industry group’s data showed an unexpected draw in US crude inventories last week.
Brent crude was quoted up 47 cents at US$52.15 a barrel, while US crude added 47 cents to US$50.76. — Reuters