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Asian shares recover early losses on Chinese trade data

EconomyOct 13, 2020 07:40
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© Reuters. Investors look at screens showing stock information at a brokerage house in Shanghai

By Scott Murdoch

HONG KONG (Reuters) - Asian stock markets steadied on Tuesday after Chinese trade data underscored the country's economic recovery, while fresh optimism about U.S. stimulus is likely to keep global investor sentiment elevated.

MSCI's broadest index of Asia-Pacific shares outside Japan (MIAPJ0000PUS) was trading up 0.12% by early afternoon after falling into negative territory early on Tuesday.

The Shanghai Composite (SSEC), which initially slipped 0.5% - trimming recent gains since a week-long public holiday last week - recovered some ground in the afternoon session to be down 0.05%.

China's blue chip index CSI300 (CSI300) was up 0.3%, after dipping 0.3% early in the day.

Sentiment improved after Chinese customs data showed exports rose 9.9% in September from a year earlier, broadly in line with analysts' expectations and up from a 9.5% increase in August. Imports jumped 13.2% compared to a 2.1% drop in August.

"The near‑term outlook for Chinese exports is supported by the continued global recovery," said Commonwealth Bank economist Kevin Xie.

"Growth in Chinese exports may start to ease because the path of the future recovery is likely to be gradual," he added.

In Japan, the Nikkei index (N225) gained 0.1% to hit 23,590. Oil prices also firmed.

Trading on Hong Kong's Hang Seng index (HSI) was canceled as the city faced a typhoon warning.

S&P 500 futures (ESc1) pared losses in afternoon trade and last sat 0.2% lower. Euro STOXX 50 futures (STXEc1) were steady and FTSE futures (FFIc1) rose 0.2%.

During the session, it emerged that Johnson & Johnson (N:JNJ) temporarily paused its COVID-19 vaccine candidate clinical trials due to an unexplained illness in a study participant.

Despite the volatility across the region, Surich Asset Management founder Simon Yuen said he was confident Asian stock markets would retain positive fundamentals following the U.S election on Nov 3.

"We expect Asian equities should outperform the global equity market in next two to three years because if (Joe) Biden is elected U.S. shall have an easier relationship with China," Yuen said.

"On the other hand, if (Donald) Trump is elected, China will promote demand in terms of consumer spending in order to increase their dominance over the world."

Australia's benchmark S&P/ASX 200 <.ASXJO> was a bright spot, up 1% on firmer bank stocks, despite a selldown in major coal names after reports China could look to ban Australian imports of the commodity.

On Wall Street, the Nasdaq Composite (IXIC) on Monday staged its biggest one-day rally in a month, jumping 2.56%. The Dow Jones Industrial Average (DJI) rose 0.88% and the S&P 500 (SPX) gained 1.64%.

"Markets are really thinking about what will happen in the U.S next year and the size of the next stimulus package," said JPMorgan Asset Management global market strategist Kerry Craig.

The U.S. dollar was pinned near a three-week low and gold, another safe-haven asset, stayed below a three-week high, slapped by investor demand for risk.

The dollar index (=USD) gained 0.1%, reversing an earlier fall in the U.S. session.

Investors await U.S. bank results with JPMorgan (N:JPM) and Citigroup (N:C) kicking off third-quarter earnings season on Tuesday. Goldman Sachs (N:GS), Bank of America (N:BAC) and Wells Fargo (N:WFC) and Morgan Stanley (N:MS) report later in the week.

Bets that more U.S. stimulus was in the offing came despite signs that talks in Washington had stalled again, leading the Trump administration to call on Congress to pass a less ambitious coronavirus relief bill.

Beijing's tensions with Washington are also in view after the White House moved forward with three sales of advanced weaponry to Taiwan, sources familiar with the situation said on Monday.

Investors are also closely watching the global resurgence in coronavirus cases after British Prime Minister Boris Johnson on Monday announced a new system of restrictions on parts of England. Lawmakers will vote on the move on Tuesday.

Gold was 0.31% weaker at $1,915.76 an ounce.

In Asian trade, Brent crude (LCOc1) was 0.3% higher at $41.86 a barrel. U.S. West Texas Intermediate (CLc1) climbed by the same amount to reach $39.55.

Asian shares recover early losses on Chinese trade data

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