Asian Stocks, Aussie Trim Gains After China Data as Crude Climbs 

• Chinese GDP growth stabilized; factory output missed estimates
• Oil nears $51 as industry report signals drop in U.S. supplies

A touch of caution was evident in financial markets after a slew of Chinese data that largely painted a picture of stabilization in the world’s second-biggest economy.

The MSCI Asia Pacific Index and the Australian dollar trimmed gains as an unexpected slowdown in China’s industrial output cast a cloud over gross domestic product figures that matched estimates. Hong Kong’s Hang Seng Index swung to a loss and the Shanghai Composite Index surrendered the bulk of its advance. A gauge of the greenback’s strength held near its lowest level in more than a week following U.S. inflation data that damped expectations for interest-rate hikes. Oil rose after data showed American supplies fell.

A stabilizing Chinese economy has helped bolster investor sentiment since January, when a tumbling yuan and signs of a slowdown spurred selloffs in global equities and commodities. While Wednesday’s data was nothing to shout about, it provides some reassurance as the Federal Reserve weighs the case for its first interest-rate hike since December. The probability of borrowing costs being increased this year slipped by three percentage points to 63 percent on Tuesday as core U.S. inflation fell short of estimates.

“China won’t do anything new in terms of policy because the economy isn’t sliding,” said Ben Kwong, a Hong Kong-based director at KGI Asia Ltd. “Under these conditions, the market doesn’t really have a direction. It needs to wait for news on U.S. rates.”

Stocks

The MSCI Asia Pacific Index added 0.3 percent as of 12:38 p.m. Tokyo time, having been up 0.4 percent prior to the China data. The Hang Seng Index declined 0.2 percent and a gauge of Chinese companies’ Hong Kong-listed shares fell 0.4 percent. The Shanghai Composite was up 0.1 percent.

Sharp Corp. surged as much as 11 percent in Tokyo after Nikkei reported that the company expects to achieve an annual operating profit for the first time in three years. Betting company Tatts Group Ltd. jumped 16 percent in Sydney after agreeing to be bought by Tabcorp Holdings Ltd. in a deal valued at A$6.4 billion ($4.9 billion). Tabcorp rose 2 percent.

Futures on the S&P 500 Index added 0.1 percent after the U.S. benchmark climbed 0.6 percent from a one-month low in the last session. Goldman Sachs Group Inc. gained 2.2 percent on Tuesday after posting a 47 percent increase in earnings, while Netflix Inc. surged 19 percent after reporting a jump in subscribers. While only 57 S&P 500 members have reported results so far, 83 percent announced earnings that exceeded analysts’ estimates, according to data compiled by Bloomberg.

Currencies

The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, declined less than 0.1 percent. The gauge has advanced this month amid speculation the Fed was getting closer to a rate hike, prompting hedge funds and money managers to boost net bullish bets.

Australia’s dollar was up 0.1 percent, after earlier strengthening as much as 0.3 percent. New Zealand’s currency was up 0.3 percent, having recorded a gain of 0.6 percent in the run-up to the Chinese data. Both countries count China as their biggest export market.

“If the Aussie and Kiwi are looking for fresh fuel, they didn’t find it in the China data,” said Sean Callow, a senior strategist at Westpac Banking Corp. in Sydney.

Bonds

Australia’s 10-year bonds gained for the first time in four days, pushing their yield three basis points lower to 2.31 percent. The rate on similar-maturity U.S. Treasuries was little changed at 1.74 percent, having fallen three basis points on Tuesday as core inflation, which excludes energy and food costs, came in weaker than economists estimated.

Commodities

West Texas Intermediate crude climbed 1 percent to $50.78 a barrel in New York. U.S. oil stockpiles dropped by 3.8 million barrels last week, the American Petroleum Institute was said to have reported. Analysts surveyed by Bloomberg forecast official data on Wednesday would show an increase in supplies. Oil has risen about 14 percent since OPEC reached a deal to manage supply last month.

Gold added 0.1 percent, gaining for a third day. Aluminum rose 0.2 percent in London, while copper was down 0.1 percent.

Source: Bloomberg

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