Asian markets fall on weak China data, North Korea fears
Asian markets slipped on Monday after a disappointing batch of Chinese growth figures, while traders keep a wary eye on the Korean peninsula, where military tensions are high.
A pick-up in the yen dragged on Japan’s Nikkei after the US warned Tokyo to avoid competitive devaluation as the unit faces heavy selling pressure on the back of huge central bank stimulus measures.
Tokyo fell 1.21 per cent by the break, Hong Kong shed 1.25 per cent, Shanghai was 0.66 per cent lower and Sydney lost 0.99 per cent, while Seoul eased 0.84 per cent.
China said its economy grew 7.7 per cent in the first quarter of the year, well below the 8.0 per cent forecast in a poll of 12 economists by AFP.
The figure is also slower than the 7.9 per cent in the previous three months and raises questions about the strength of the world’s No 2 economy, which is a key driver of global growth.
In a statement, the National Bureau of Statistics cited “the complicated and volatile economic environment at home and abroad”.
Monday’s data is the latest in a string of weak results, including on manufacturing, inflation and investment.
The economy grew 7.8 per cent in 2012, its slowest rate in 13 years, and authorities have kept their growth target for 2013 at a conservative 7.5 per cent.
Wendy Chen, a Shanghai-based economist at Nomura Securities, said: “The [growth] figure was lower than market expectations, indicating the recovery in the real economy was not on a solid foundation and remained weak.”
She added that given concerns about inflation rising in the next few months it was unlikely the central bank will move to stimulate the economy by cutting interest rates “as loosening monetary policy may bring greater inflationary risks”.
Selling was also being fuelled by uncertainty over North Korea, which is expected to mark the birthday of its late founder Kim Il-sung by launching a missile.
The tensions continue to rise despite moves by Seoul and Washington for talks to temper recent bellicose rhetoric from the North Koreans.
Intelligence reports say it has had two medium-range missiles primed and ready to fire for nearly a week.
On currency markets the yen extended gains seen in New York on Friday after the United States said it was monitoring Japan’s policies and urged Tokyo to avoid “competitive devaluation” of its currency.
The comments from the US Treasury, in a twice-yearly report on foreign-exchange policies, come after the Bank of Japan earlier this month unveiled bold stimulus measures to kickstart the economy and defeat deflation.
The moves sent the dollar soaring to almost 100 yen, a level not seen since April 2009.
In early Tokyo trade greenback was changing hands at 98.27 yen, compared with 98.37 yen in New York Friday and sharply down from 99.95 yen in Tokyo earlier on Friday.
The euro sat at 128.45 yen from 128.89 yen and US$1.3095, compared with US$1.3099.
On Wall Street the Dow, which is sitting at record highs, finished flat, while the S&P 500 fell 0.28 per cent after also hitting all-time highs, while the Nasdaq lost 0.16 per cent.
Oil prices fell, with New York’s main contract, light sweet crude for delivery in May, dropped 80 cents to US$90.49 a barrel and Brent North Sea crude for May shed 31 cents to US$102.80.
Gold was at US$1,442.00 an ounce, compared with US$1,548.60 late on Friday.