Asian shares firm after Wall Street records, China GDP awaited

Investors look at computer screens showing stock information at a brokerage house in Shanghai, China January 16, 2020. — Reuters pic
Investors look at computer screens showing stock information at a brokerage house in Shanghai, China January 16, 2020. — Reuters pic

SHANGHAI, Jan 17 — Asian shares inched higher today after global stock indexes and Wall Street posted more records, with strong corporate earnings and upbeat US economic data adding to optimism after China and the US signed a partial trade deal.

But investors will be closely watching key Chinese economic data for clues on whether a marked slowdown in the world's second-largest economy is starting to bottom out.

China is expected to post its weakest annual growth rate in 29 years — 6.1 per cent — due to anaemic domestic demand and the damaging trade war with the United States.

Data in the last few months have pointed to an improvement in Chinese manufacturing and business confidence as trade tensions eased, but analysts are not sure if the gains can be sustained and Beijing is widely expected to roll out more stimulus measures.

Fourth-quarter and 2019 gross domestic product (GDP) data and December factory output, retail sales and fixed-asset investment numbers are due at 0200 GMT.

In early trade before Chinese markets opened, MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.19 per cent, taking gains for the month to 3.4 per cent.

Australian shares were up 0.49 per cent after setting four consecutive record closing highs in previous days. Japan's Nikkei added 0.55 per cent.

MSCI's global share index inched up 0.05 per cent, just off new record highs set earlier in the session.

But analysts say global equities may find it difficult to maintain momentum from their recent rally as optimism over the US-China trade truce gives way to uncertainty over the next steps in trade talks.

While the Phase 1 deal is seen as defusing the 18-month row that has hit global growth, experts say it is unlikely to provide much balm for broader frictions between the two countries. Most of the tariffs imposed during the dispute remain in place and a number of thorny issues that sparked the conflict are still unresolved.

“The challenge from here is how long we can maintain these improvements,” said Steven Daghlian, market analyst at CommSec in Sydney.

“Speaking of the Aussie market specifically, a 6 per cent gain in two weeks is obviously a massive challenge to replicate in the tail end of the month. You don't really see 10, 11, 12 per cent improvements over the course of a month without any gigantic positive catalysts.”

In the US yesterday, a combination of upbeat earnings from Morgan Stanley, rising US retail sales, a strong labour market and robust manufacturing data helped to lift Wall Street to record highs.

The Dow Jones Industrial Average rose 0.92 per cent to 29,297.64, the S&P 500 gained 0.84 per cent to 3,316.81 and the Nasdaq Composite added 1.06 per cent to 9,357.13.

The US data also supported the US dollar, which held steady today. The greenback was up 0.05 per cent against the yen at 110.19. while the euro inched 0.02 per cent higher to buy US$1.1137.

The US dollar index, which tracks the greenback against a basket of six major rivals, was flat at 97.320.

The rally in equities was mirrored in US benchmark 10-year Treasury notes, which saw yields tick up to 1.8214 per cent from their close yesterday at 1.809 per cent. Yields rise as prices fall.

US West Texas Intermediate crude futures were 0.17 per cent higher at US$58.62 (RM238.60) per barrel, while gold shed 0.07 per cent to US$1,551.50 per ounce on the spot market. — AFP

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