Stock market today: Asian shares turn lower after China economic data weaker than expected

May 16, 2023  -Asian shares were mostly higher on Tuesday even though the latest data showed China’s economy is weaker than expected, with domestic demand failing to bounce back as much as hoped for after the pandemic.

Benchmarks advanced in Tokyo, Hong Kong and Seoul but fell in Shanghai and Sydney.

China’s economic recovery after the pandemic faces pressure from sluggish consumer and export demand, a government official said Tuesday, with retail sales and other activity in April weaker than expected.

Retail sales rose 18.4% over a year earlier, up 7.8 percentage points from March, official data showed. Other indicators were mixed: Factory output rose 5.6% over a year ago but was off 0.5% from March. Investment in factories, real estate and other fixed assets was up 4.7% in the first four months of 2023, but that was off 0.4 percentage points from the first quarter’s growth rate.

“Today’s activity data suggest China is mired in an extended soft patch,” said Stephen Innes of SPI Asset Management in a report.

Julian Evans-Pritchard of Capital Economics said the post-pandemic recovery was likely to “fizzle out” in the second half of the year. “Meanwhile, the challenging global picture will prevent much pick-up in Chinese exports,” he said.

Tokyo’s Nikkei 225 index surged 0.7% to 29,842.99, continuing a climb toward its highest level since the early 1990s that has been helped by strong corporate earnings and signs that inflationary pressures might be easing.

The Hang Seng in Hong Kong fell 0.2% to 19,945.86, while the Shanghai Composite index lost 0.5% to 3,292.99.

In Seoul, the Kospi edged 0.1% lower, 2,477.14, while Australia’s S&P/ASX 200 slipped 0.4% to 7,240.90.

On Monday, the S&P 500 rose 0.3% to 4,136.28 and the Dow Jones Industrial Average edged 0.1% higher, to 33,348.60. The Nasdaq composite climbed 0.7% to 12,365.21.

Some of the sharper moves came from companies announcing takeovers of rivals, including a 9.1% drop for energy company Oneok after it said it’s buying Magellan Midstream Partners. Magellan jumped 13%.

But market was relatively quiet as several concerns dragged on sentiment.

A chief one is the fear of a recession hitting later this year, mainly because of high interest rates meant to knock down inflation. Cracks in the U.S. banking system and the U.S. government’s inching toward a possible default on its debt as soon as June 1 are added worries.

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