Asian shares mixed as China reports faster growth in trade

AP – Shares were mixed in Asia yesterday, as investors were encouraged by strong growth in China’s trade in September.

An overnight rally on Wall Street, driven mainly by technology companies such as Apple and Amazon, faded amid worries over United States (US) economic stimulus and a resurgence of coronavirus caseloads in many countries.

But the release of stronger trade data in Beijing helped Tokyo recover from early losses.

Shanghai declined. Hong Kong’s market was closed for a typhoon.

China’s exports rose 9.9 per cent from a year earlier to USD239.8 billion in September, while imports gained 13.2 per cent to USD202.8 billion. Yesterday’s customs data showed exports to the US rose 20.5 per cent to USD44 billion despite higher US tariffs, while imports of American goods rose 24.5 per cent to USD13.2 billion.

Chinese exporters benefitted from China’s relatively early re-opening from pandemic shutdowns and from strong global demand for masks and medical supplies. They have been taking market share from foreign competitors that are hampered by anti-disease controls.

“Exports continued to do well, most likely thanks to the recent strength of retail sales among China’s major trading partners. And a jump in imports suggests that domestic investment spending remains robust,” Capital Economics’ Julian Evans-Pritchard said in a report.

A man walks near the screens showing the Korea Composite Stock Price Index (KOSPI) at the Korea Exchange in Seoul, South Korea. PHOTO: AP

Traders were keeping an eye on the Chinese currency after the central bank scrapped a requirement for currency traders to post cash deposits, opening the way for more negative speculation on the country’s yuan, which might help to restrain its rise in value.

The change took effect on Monday and eliminates a requirement imposed in 2018 for a 20 per cent deposit on yuan trades to discourage speculators.

The recovery of the world’s second biggest economy has been a rare bright spot as investors wait to see if the US Congress will manage to provide further economic aid for Americans and businesses struggling due to the coronavirus pandemic. With caseloads in the US, Europe and many other countries gaining pace, risks of further disruptions to trade, business and other daily activities are rising in some regions.

Tokyo’s Nikkei 225 index edged 0.2 per cent higher to 23,601.78, while the Shanghai Composite index slipped 0.1 per cent to 3,355.72. South Korea’s Kospi was almost unchanged at 2,402.91. Shares were mixed in Southeast Asia.

India’s Sensex picked up 0.2 per cent to 40,681.15.

Australia’s S&P/ASX 200 climbed one per cent to 6,195.70, led by gains in banks’ shares.

Strong Chinese demand is good news for Australian exporters, though unconfirmed reports that Beijing is slowing or halting imports of Australian coal raised concerns over the economic impact of political friction between the two countries.

Wall Street extended its gains on Monday from last week’s rally, the market’s best in three months, as investors appeared to largely shrug off the latest signs that Democrats and Republicans remain far apart on the issue of more aid for the economy.

The S&P 500 rose 1.6 per cent to 3,534.22, with Big Tech stocks, including Apple and Microsoft, powering much of the gains. The benchmark is now within 1.4 per cent of its all-time high set on September 2.

Investors may be betting that Congress will deliver a more generous aid bill after the November 3 election.

Analysts are forecasting the upcoming earnings reporting season will show another quarter of weaker profits. S&P 500 earnings are expected to be down 20.5 per cent from a year earlier, according to FactSet, better than the 31.6 per cent drop in the spring quarter.

In energy dealings, US benchmark crude gained 37 cents to USD39.80 per barrel in electronic trading on the New York Mercantile Exchange. It lost USD1.17 to USD39.43 per barrel on Monday.

Brent crude also added 37 cents, to USD42.09 per barrel.

The US dollar strengthened to JPY105.37 from JPY105.34. The euro weakened to USD1.1799 from USD1.1896.