Traders shrug off China data as markets rise
ASIAN markets mostly rose yesterday but early gains were pared as dealers shrugged at news China’s economy had stabilised in the third quarter.
News that China grew at 6.7 percent during July-September, beating a forecast in an AFP poll, came as relief following a years-long slowdown in the country that has been a major drag on economies from Asia to the Americas. Analysts said there was little in the data to drive big moves and it would likely mean Beijing will hold off any fresh stimulus measures.
“China won’t do anything new in terms of policy because the economy isn’t sliding,” Ben Kwong, a Hong Kong-based director at KGI Asia, told Bloomberg News. “Under these conditions, the market doesn’t really have a direction. It needs to wait for news on US [interest] rates.”
Shanghai ended flat and Hong Kong gave up 0.4pc. However, Tokyo closed 0.2pc higher and Sydney – where several listed firms have interests in China – rose 0.5pc. Seoul was slightly higher, Singapore put on 0.2pc, Taipei added 0.7pc and Manila soared 1.8pc.
China’s yuan benefited from the data, climbing against the dollar for the first time in eight sessions.
The dollar struggled to recover from the previous day’s losses against the yen after dealers were left unimpressed by US inflation data that analysts said did nothing to strengthen the case for a US interest rate hike.
A below-forecast reading on producer inflation “was not sufficient to derail the prospects of a December Fed lift-off, but certainly continues to support the gradual and flat pace of rate hikes into 2017”, Stephen Innes, senior trader at OANDA, said.
The dollar also suffered selling against most Asia-Pacific currencies, with the South Korean won up 0.6pc and Indonesia’s rupiah gaining 0.1pc. There were also gains for Thailand’s baht and the Malaysian ringgit.
Forex traders will be keenly following a European Central Bank meeting today after recent speculation it is considering tapering its vast stimulus. Despite the chatter, some analysts expect it to maintain its easing program and possibly flag fresh measures in December.