Asian stocks were little changed, after the benchmark equity index rallied on Tuesday, as investors weighed data showing Japan’s economy grew more than initially reported and investors awaited a report on Chinese trade.
The MSCI Asia Pacific Index rose less than 0.1 percent to 131.47 as of 9:01 a.m. in Tokyo, after rallying 1.1 percent on Tuesday. The World Bank cut its outlook for global growth as business spending sags in advanced economies including the U.S. The downgrade comes as world equities hover near the highest level of 2016 while the Federal Reserve considers another increase in interest rates. China’s trade data due Wednesday is forecast to show tepid global demand.
“With global growth moderating, the Fed will be more gradual in its approach to raising interest rates,” Shane Oliver, head of investment strategy at Sydney-based AMP Capital Investors Ltd., which oversees about $120 billion. “That’s going to help boost equities, particularly in emerging markets. Chinese data is still a concern. While growth has somewhat stabilized, we haven’t really seen an improvement.”
Central banks are in the spotlight, with policy decisions from the Fed and the Bank of Japan scheduled for next week. Futures traders lowered the possibility of a U.S. interest rate hike by July to 18 percent after Fed Chair Janet Yellen signaled Monday that the world’s biggest economy is strengthening enough to withstand gradual increases in borrowing costs. Asian stocks rallied to a five-week high on Tuesday after Yellen’s comments.
World gross domestic product will grow by 2.4 percent this year, an “insipid” pace that’s unchanged from 2015 and down from the 2.9 percent estimated in January, the Washington-based development bank said Tuesday in its semiannual Global Economic Prospects report. The lender cut its growth outlook for Japan to 0.5 percent, down from 1.3 percent in January, amid weak consumer spending and exports.
Chinese trade data due Wednesday will likely show overseas shipments dropped 4 percent last month, compared with a 1.8 percent decline in April. Reports last week showed an official factory index stood at 50.1, around the line between expansion and contraction, while a non-manufacturing gauge fell from the previous month.
Japan’s Growth
Japan’s Topix index swung between gains and losses as the yen rose for the sixth time in seven days against the dollar. Gross domestic product expanded by an annualized 1.9 percent in the three months ended March 31, more than a preliminary report of 1.7 percent, according to revised data from the Cabinet Office released on Wednesday.
Australia’s S&P/ASX 200 Index slipped 0.5 percent. South Korea’s Kospi Index was little changed. New Zealand’s S&P/NZX 50 Index lost 0.4 percent. Markets in China and Hong Kong have yet to start trading.
Futures on the FTSE China A50 Index gained 0.3 percent in their most recent trading, while those on Hong Kong’s Hang Seng Index added 0.2 percent.
The Hang Seng Index advanced 1.4 percent on Tuesday to the the highest level in five weeks amid speculation Chinese authorities will soon announce the start date for an exchange link with Shenzhen. The city’s benchmark index surpassed the 200-day moving average for the first time since July 2015, while a gauge of mainland shares in Hong Kong increased for an eighth day, the longest winning streak since April 2015. The Shanghai Composite Index finished 0.1 percent higher.
Futures on the S&P 500 Index were little changed. The U.S. equity benchmark index gained 0.1 percent on Tuesday, finishing less than 1 percent below an all-time high, as rallies in energy producers and airline operators offset slumping health-care and bank shares.
West Texas Intermediate crude oil traded little changed at $50.38 per barrel. U.S. crude stockpiles are estimated to have fallen for a third week, trimming a glut. Crude has surged about 90 percent from a 12-year low in February amid unexpected disruptions and a continuous slide in U.S. output, which is under pressure from the Organization of Petroleum Exporting Countries’ policy of pumping without limits.
--With assistance from Adam Haigh To contact the reporter on this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net. To contact the editors responsible for this story: Jeff Sutherland at jsutherlan13@bloomberg.net, Anna Kitanaka
©2016 Bloomberg L.P.
