By Scott Murdoch
SYDNEY, April 18 (Reuters) - Asian stocks weakened on
Tuesday, brushing off an initial lift from better-than-expected
Chinese economic data as signs of patchiness in the country's
recovery weighed on investor sentiment.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.5%, a deeper loss than earlier in the day
when it was off 0.27%.
China's economy grew 4.5% year-on-year for the first
quarter, eclipsing the expectations of most economists.
The currencies of Australia and New Zealand , whose exports are reliant on Chinese demand, both
popped higher after the GDP data.
Despite some initial momentum in wider markets, the
better-than-expected data failed to fire up a sustained rally in
regional equities.
Hong Kong's Hang Seng Index fell 0.85% on Tuesday,
dragged lower by consumer and technology stocks. China's
bluechip CSI300 Index was barely higher as it gained
0.08%.
Australian shares were off by 0.45%. Japan's Nikkei
stock index was the standout performer in the region as
it rose 0.55%.
Analysts said The mixed market performance was the result of
some underlying Chinese data falling below expectations, despite
the strong headline results.
Separate data on Chinese activity also released on Tuesday
showed factory output speeding up but missing expectations while
fixed asset investment growth unexpectedly slowed.
"The headline number is a positive surprise and overall it's
a good set of numbers albeit uneven, that is reflected in the
markets response," said David Chao, global market strategist for
Asia Pacific at Invesco.
"The thesis the market has that China is exiting the
pandemic and growth will be driven by consumption is still in
tact. While the recovery is on track, I don't think economic
growth from what we have seen so far is exceeding expectations
too much."
Chao said weaker property investment during the quarter
showed the trouble-proned sector had not recovered and could
again hold back China's economic growth this year.
"I think the numbers show today that the 5% growth target
will be met but how much growth exceeds that will be contingent
on the property market," he said.
For 2023, GDP growth was expected to pick up to 5.4%, a
Reuters poll last week showed, from 3.0% last year, which was
one of its worst performances in nearly half a century due to
the pandemic.
China's government has set a 5% target for economic growth
for this year after missing the 2022 goal.
In Asian trade, the yield on the benchmark 10-year Treasury
notes rose to 3.5889% compared with its U.S. close
of 3.591% on Monday.
The two-year yield , which rises with traders'
expectations of higher Fed fund rates, touched 4.1773% compared
with a U.S. close of 4.188%.
Elsewhere, Australia's central bank considered hiking rates
for an 11th time in April before deciding to pause, but was
ready to tighten further if inflation and demand failed to cool,
minutes of the Reserve Bank of Australia's April meeting showed.
In early European trades, the pan-region Euro Stoxx 50
futures were up 0.16% at 4,322, German DAX futures were up 0.13% at 15,951, FTSE futures were up
0.16% at 7,893.
U.S. stock futures, the S&P 500 e-minis , were down
0.08% at 4,173.3.
The dollar rose 0.02% against the yen at 134.49 ,
still some distance from its high this year of 137.91 hit in
March.
The European single currency was up 0.1% to $1.0929,
having gained 0.89% in a month, while the dollar index ,
which tracks the greenback against a basket of currencies of
other major trading partners, was down at 102.03.
U.S. crude ticked up 0.27% to $81.05 a barrel. Brent
crude rose to $85per barrel. Gold was slightly high with the spot price at
$1999.45 per ounce. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
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(Reporting by Scott Murdoch in Sydney; Editing by Himani Sarkar
and Sam Holmes)
