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Asian Shares Mixed; China Data Offset Stimulus Hopes

Published: September 10, 2012 | 5:58 am
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Asian markets were mixed Monday as weak Chinese economic data offset rising hopes for stimulus measures from the Federal Reserve following Friday’s weaker-than-expected U.S. jobs data, while Japanese and Korean firms with businesses in China gain on Beijing’s recent slew of approved infrastructure projects.

Stocks were higher across the region early in the session, but dipped lower after China announced that its trade surplus widened in August as imports fell unexpectedly. This add to figures released over the weekend showing industrial production continued to slow in August, up 8.9% on year compared to July’s 9.2% rise, its lowest rate since May 2009.

“The imports figure shows that domestic demand is in a sluggish state, but exports came in within expectations and that has mitigated the situation,” said Zhang Yanbin, an analyst at Zheshang Securities in China.

Hopes for stimulus helped counteract the negative sentiment over China. Now that the European Central Bank has outlined its plan to save the euro, the focus is now on the U.S. Federal Reserve and whether it will launch a new round of quantitative easing at its two-day policy meeting set to commence on Wednesday. U.S. employment data released on Friday failed to meet expectations and strengthened hopes that the Fed will introduce fresh stimulus measures this week.

“Traders now think that it is not an issue of if we will see easing [from the Fed], but the scope of any plan,” said Tim Waterer, senior trader at CMC Markets in Sydney.

The euro weakened to $1.2786 Monday, after soaring 1.5% against the dollar on Friday following the poor U.S. jobs figures. The greenback also fell against the yen Friday – the pair stabilized at ¥78.22 on Monday.

The firmer yen, along with news that the Japanese economy grew at a slightly slower rate than expected in the April to June period, weighed on the Nikkei Stock Average, which was off 0.3%. Exporters performed badly, as a stronger yen makes their products more expensive abroad —Panasonic 6752.TO -0.55% was down 1.1%, while Nikon 6588.TO -0.88% was 3.4% lower.

Japanese producers of construction equipment continued to rise as Beijing was reported to have given the green light to a wide range of infrastructure projects in China late last week. Komatsu added 2.1% and Hitachi Construction Machinery 6305.TO +2.20% gained 1.8%.

China-linked stocks in South Korea were also higher, where the Kospi was down 0.1%. Steelmaker Posco was up 0.6% and construction equipment manufacturer Doosan Infracore added 1.9%.

In China, Hong Kong’s Hang Seng Index was 0.1% higher, while the Shanghai Composite Index added 0.4% as investors remained excited about the approval of a wide range of infrastructure projects last week.

Australia’s S&P ASX 200 fell less than 0.1% though mining stocks gained following a rise in base metals prices.

Spot iron ore was higher, resulting in strong gains for miners with a focus on iron: Rio Tinto RIO.LN +6.15% was up 3.4% and Fortescue Metals Group gained 4.4%.

Gold was steady after Friday’s 2.1% gain, giving gold miners a push. In Australia, Newcrest Mining was up 4.1%. Shandong Gold-Mining 600547.SH +2.45% Company was up 3.5% in China, and Zijin Mining Group also climbed 3.5% in Hong Kong.


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