Asian shares mixed as China reports economy slowed in Q2

BANGKOK (AP) — Shares were mixed in Asia yesterday with gains in Chinese markets on hopes for fresh stimulus measures after the government reported that the economy grew at the slowest pace in a decade in the last quarter.

Analysts said the 6.2 per cent annual rate of growth reported for April-June suggests the trade war between the United States (US) and China is hammering industries.

The Shanghai Composite index gained 0.4 per cent to 2,942.19 while Hong Kong’s Hang Seng index gained 0.2 per cent to 28,536.36. Australia’s S&P ASX 200 fell 0.7 per cent to 6,653.00 and in South Korea, the Kospi shed 0.2 per cent to 2,082.48. India’s Sensex climbed 0.2 per cent to 38,802.90. Japan’s markets were closed for a national holiday.

The growth data for China was the weakest since the first quarter of 2009, in the aftermath of the global financial crisis.

Tariff hikes by President Donald Trump have battered Chinese as well as US exporters, and Chinese leaders have increased spending and loosened controls on bank lending to keep growth within this year’s range of six per cent to 6.5 per cent.

A currency trader watches monitors at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea. – AP

Trump and Chinese President Xi Jinping agreed in late June to restart talks on their stand-off over the longstanding US trade deficit and Chinese economic policies the US side said are unfair and violate market Beijing’s market opening commitments.

That truce is fragile, however, since the issues that caused talks to break down in May remain. Since China is the biggest export customer for many of its neighbours and huge market for global suppliers of food, mobile phones and other goods, weaker growth is unwelcome. However, expectations for more government stimulus to combat the slowdown could drive share prices higher.

“We remain concerned about whether the credit expansion can boost real economic activities,” Raymond Yeung of ANZ said in a commentary.

“We believe the People’s Bank of China will continue to adopt a targetted policy as opposed to quantitative easing to support growth.” The mixed day in Asia followed a rally last Friday in New York that pushed major US stock indexes to record highs, with the S&P 500 ending above 3,000 for the first time.

The Dow Jones Industrial Average gained 0.9 per cent to 27,332.03. The S&P 500 rose 0.5 per cent to 3,013.77 and the Nasdaq composite index advanced 0.6 per cent to 8,244.14. All were record highs.

Investors are betting the Federal Reserve will cut its benchmark interest rate later this month for the first time in more than a decade to help counter slowing growth.

Bond yields have been moving higher for several days, suggesting investors are confident the US economy will power ahead, at least for the next several months.

The yield on the benchmark US 10-year Treasury note was 2.12 per cent compared to the multi-year low of 1.95 per cent the bond hit only 10 days ago.

ENERGY: Benchmark crude oil fell two cents to USD60.19 per barrel in electronic trading on the New York Mercantile Exchange. It rose one cent to settle at USD60.21 a barrel last Friday in New York.Brent crude oil, the international standard, gained seven cents to USD66.79 a barrel.

CURRENCIES: The dollar rose to 107.98 Japanese yen from 107.91 yen last Friday. The euro strengthened to USD1.1277 to USD1.1272.