MUMBAI (MarketWatch) — Asia markets pared gains but ended firmly in positive territory on Friday, after data showing China’s economy cooled more than expected in the first quarter triggered fresh hope for more policy support.
Hong Kong’s Hang Seng Index /zigman2/quotes/210598030/delayed HK:HSI -1.52% climbed 1.8% and Japan’s Nikkei Stock Average /zigman2/quotes/210597971/delayed JP:NIK -0.98% added 1.2%, while Australia’s S&P/ASX 200 index /zigman2/quotes/210598100/delayed AU:XJO -0.63% put on 1% and South Korea’s Kospi /zigman2/quotes/210598069/delayed KR:180721 -0.93% gained 1.1%.
China’s Shanghai Composite /zigman2/quotes/206600939/delayed CN:000001 -3.42% edged up 0.4%.
Markets Rally on Interest-Rate Comments
The Dow Jones Industrial Average posted its largest one-day percentage gain in nearly a month after the New York Fed's president reiterated that interest rates will likely remain low. Brendan Conway reports on The News Hub. Photo: AP
China’s economic growth slowed by more-than-expected to 8.1% in the first quarter from the same period a year earlier, official data released Friday showed.
That growth compared with an 8.9% increase in the country’s gross domestic product (GDP) in the fourth quarter of 2011, and also falls short of the 8.5% expansion expected by economists surveyed by FactSet Research.
A string of other Chinese economic reports were also released, including retail sales and industrial output.
Still, Xianfang Ren, senior China analyst at IHS Global Insights said that, while the result marked a sharp slowdown on the previous quarter, “green shoots have sprung up in many sectors, convincing us that the current slowdown looks more and more like a slow consolidation, rather than a precipitous downturn.”
Additionally, slowing growth may support expectations that the Chinese government will implement further monetary easing measures.
“We believe that the government will react to this weaker-than-expected GDP growth rate by introducing more policy measures to boost lending, speed up project starts, encourage consumption, and support property sales,” Jun Ma, Deutsche Bank greater China chief economist said.
“The fact that the trough of sequential growth is likely behind us and that further policy easing is forthcoming in the second-quarter will provide a very positive environment for the equity market,” Ma said.
The China growth figures couldn’t completely dampen early optimism that had been generated after U.S. stocks jumped on Thursday.
Comments from the New York Federal Reserve president helped spur hopes of more stimulus and investors also welcomed lower borrowing costs in Europe and strong lending data from China. Read more on the U.S. session.
And North Korea’s rocket launch on Friday morning fizzled out after it reportedly broke apart soon after takeoff. Read more on North Korea's reported rocket launch.
South Korean shares rebounded from previous session weakness with firms in the key shipping sector driving gains. Daewoo Shipbuilding & Marine Engineering Co. Ltd. surged 5.9% and Samsung Engineering Co. Ltd. advanced 5.5%.
The Bank of Korea left interest rates on hold at 3.25% as widely expected. Read more on the Bank of Korea's decision.
In Hong Kong trading, financial and property sector firms rallied. Agricultural Bank of China Ltd. /zigman2/quotes/207749118/delayed ACGBY +0.58% /zigman2/quotes/200705246/delayed HK:1288 -1.84% jumped 6% and Ping An Insurance Group Co. /zigman2/quotes/202212125/delayed PNGAY +0.57% /zigman2/quotes/210315058/delayed HK:2318 -1.61% climbed 4.3%. China Overseas Land & Investment Ltd. /zigman2/quotes/205731176/delayed HK:688 -3.89% /zigman2/quotes/202573805/delayed CAOVY +0.98% added 2.4% and China Resources Land Ltd. /zigman2/quotes/202417326/delayed HK:1109 -3.23% /zigman2/quotes/209191868/delayed CRBJY +0.04% rose 5.5%.
Shares in shipping giant China Cosco Holdings Co. /zigman2/quotes/205658335/delayed HK:1919 -0.98% fell 0.2% after reports the shipping firm could seek up to 10 billion yuan ($1.59 billion) from the Ministry of Finance after record losses in 2011. Read more on Cosco seeking government funds.
Gains for resource firms in Australian also moderated after the weaker-than-expected growth figures from key customer China.
Global miners BHP Billiton Ltd. /zigman2/quotes/201448516/delayed AU:BHP -0.32% /zigman2/quotes/208108397/composite BHP +1.37% and Rio Tinto Ltd. /zigman2/quotes/200083756/delayed AU:RIO -1.11% /zigman2/quotes/202627887/composite RIO +0.92% advanced 1.7% and 2.3% each, while copper producer PanAust Ltd. gained 4.5%.
Shares in Lynas Corp Ltd. /zigman2/quotes/202074955/delayed AU:LYC -3.31% jumped 7.8% after the rare earths miner won a court battle as it attempts to complete a processing plant in Malaysia.
In Tokyo, index heavyweight Fast Retailing Co. /zigman2/quotes/200663563/delayed JP:9983 -1.58% /zigman2/quotes/203924235/delayed FRCOY -0.63% lent support, with shares surging 8.6%, after the firm revised up its full-year earnings outlook and reported a rise in interim profits late Thursday. Read more on Fast Retailing's result.
Major Japanese exporters making ground included Canon Inc. /zigman2/quotes/207639533/delayed JP:7751 -0.52% /zigman2/quotes/210242912/composite CAJ -0.43% , rising 1.3% and Casio Computer Co. /zigman2/quotes/202492162/delayed JP:6952 +0.48% /zigman2/quotes/206719136/delayed CSIOY +1.97% up 2.4%. They were supported by dollar strength against the yen during Asian trading. The dollar /zigman2/quotes/210561789/realtime/sampled USDJPY -0.2367% rose to a high of ¥81.19 yen, up from ¥80.77 in North American trade late Thursday, according to Factset Research.
On the downside, Sony Corp. /zigman2/quotes/201361720/delayed JP:6758 -0.11% /zigman2/quotes/208567357/composite SNE +0.35% tumbled 5.5% after the electronics giant said it would cut 10,000 jobs worldwide as part of a restructure and set out financial targets late Thursday. Read more on Sony's restructure.