Asia report: Stocks mostly higher on calmer Korea, strong Japanese GDP
Asian stocks mostly finished in the green on Monday, though Japan's Nikkei retreated after encouraging second-quarter growth numbers.
The main equity indices of China, Hong Kong, India, Australia and Korea all closed higher, with the Shanghai composite up 0.9% to 3,237.36 and the Hang Seng climbed 1.36% to 27,250.23.
The Nikkei lost 0.98% to 19,537.10, which saw the regional MSCI Asia Pacific index fall 0.82% to 158.45.
Preliminary Japanese second quarter GDP figures came in significantly stronger than expected at 4.0% year-on-year versus the 2.5% expected, driven by an increase in consumer spending and capital expenditure.
"If Japan can carry this momentum into the second half of the year, the Bank of Japan may be able to consider whether less accommodation is necessary, although as it stands, inflation still remain well below target," said analyst Craig Erlam at Oanda.
The Nikkei's fall was partly reflecting a catch up effect as last Friday was a holiday, pointed out Jim Reid at Deutsche Bank, who also noted that the bank's Japanese economist believes the second quarter trend "appears too good to be sustained, partly as major leading indicators of investment appear to have already peaked".
Japan's yen, a traditional safe haven asset, fell despite the better data.
This was balanced by China's National Bureau of Statistics reporting that industrial production in the country slowed to a 6.4% year-on-year rate in July, below the consensus forecast of 7.1% and down from a 7.6% pace in the month before.
Chinese retail sales were also on the weak side, printing at 10.4% in terms of the year-on-year rate of change, down from 11.0% in the previous month and below the consensus of 10.8%.
The same was true of the the latest figures for fixed asset investment in the People's Republic, which slowed from a 8.6% rise over the first six months to June to 8.3% for the year to the end of July.
Improving the market mood, was the simmering down of regional tension as North Korea and the USA rowed back on the rhetoric.
"Chinese involvement in the recent spat between North Korea and the US has been one of the biggest calming influences, highlighting that for the US to go to war with North Korea it must first go through China," said analyst Joshua Mahony at IG, with China on Monday moving to implement an import ban on host of North Korean products.
"Crucially, we have seen a significant dent in the Chinese growth story, with both domestic consumption and export-led growth falling back in the form of weak retail sales and industrial production figures," said Mahony.
He pointed to earnings data from UK freight operator Clarkson, which saw an improved outlook with the expectation of a resurgent China.
"However, if today’s data is anything to go by, China still has some way to go before we can expect global trade to get back on course."