Asian Stocks Close Higher On Upbeat China Data

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Shares in Asia closed higher Tuesday as economic growth data from China suggested that the government there would likely step up its easing measures. China’s inflation growth was slower in July 2016 compared to the same month last year. Consumer prices in China grew only 1.8% last month compared to the government’s target of 3% of inflation growth for 2016.

As an aside, inflation numbers posted out of China are doubted by many Western investment firms, and the Chinese authorities may be deliberately underreporting inflation statistics so as to justify further easing measures.

The overnight rise in U.S. crude oil prices also supported stock gains in Asia. The U.S. oil price rose 2.9% to $43.02 a barrel after the OPEC announced September informal meeting. Traders are betting that OPEC might consider freezing oil production to help crude prices up given how slow it has been for oil to recover from its lows despite signs of easing glut. The prospects of a production freeze however are still unlikely.

How the indices performed

In Japan, the Nikkei 225 (INDEXNIKKEI:NI225) rose 0.7%, led by rising stocks in the country’s Paper & Pulp, Mining and Food sectors.

In Taiwan, the Taiwan Weighted rose 0.05% to touch a new 52-week high. The gains in the index were supported by rising Financial, Iron & Steel and Oil, Gas & Electricity sectors.

South Korea’s KOSPI backed the trend in the Asian region, rising more than 0.6% at close.

What about China?

Markets in China were a bit mixed. Shanghai Composite rose 0.7%, while the smaller HANG SENG INDEX (INDEXHANGSENG:HSI) index in Hong Kong eased 0.13%.

Slower inflation growth in China seemed to have sent mixed signals to investors in the country. While some see the tepid consumer price data as a sign that Beijing would step up the efforts to stimulate the growth of the domestic economy, others appeared to worry about a prolonged period of economic uncertainty.

Australia

Stocks in Australia closed higher on Tuesday, with the S&P/ASX 200 adding 0.29%. The index was led up by rising stocks in the country’s Financials, Telecoms Services and Energy sectors.

Commodity trading

Commodity prices edged up in Asia and experts link the gains to speculations that China will increase spending on infrastructure.

“Coal and steel prices picked up significantly on speculation that increased government spending on infrastructure projects will lift up demand for hard commodities,” observed economist, Zhou Hao, of Commerzbank AG.

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