Asia markets mostly down after China data

[HONG KONG] Equity markets in Hong Kong ticked higher Wednesday but Shanghai sank after a further slowdown in Chinese economic growth raised hopes for more stimulus, while Tokyo edged down on a stronger yen.

Disappointing US retail sales dampened hopes for an early interest rate cut by the Federal Reserve, causing a drag on the dollar, while the euro was supported by upbeat eurozone figures.

Hong Kong rose 0.20 per cent but Shanghai fell 1.10 per cent.

Seoul gained 0.39 per cent, Tokyo was flat and Sydney shed 0.83 per cent.

China said the world's number two economy expanded 7.0 per cent in the first three months of 2015, slightly better than the forecast in a survey by AFP but much slower than October-December. It was also the worst for a single quarter since the first three months of 2009, in the depths of the global financial crisis.

The figures are the latest to highlight a slowdown in the economy and will likely increase expectations Beijing will announce more stimulus on top of two interest rate hikes since November.

The economy grew last year at its slowest pace in almost a quarter of a century as it is buffeted by weak manufacturing, slow domestic demand and low government investment, among other things.

Hopes for more loosening have fanned a rally in Hong Kong and Shanghai stocks. In the past nine sessions Hong Kong has soared almost 15 per cent as mainlanders pick up what they consider cheap equities following a year-long run-up in Shanghai that has almost doubled its value.

"It is urgent for policymakers to do more now to stimulate the economy," said Dariusz Kowalczyk, senior economist at Credit Agricole in Hong Kong.

"We expect acceleration in fiscal spending and in government-orchestrated infrastructure projects, as well as more monetary easing," he told Bloomberg News.

In forex markets the dollar struggled after losing ground in New York in response to the retail sales report. It bought 119.55 yen Wednesday compared with 119.44 yen in US trade, but well down from the 119.80 yen earlier Tuesday in Tokyo.

Expectations for an early Federal Reserve rate hike were narrowed after official data showed retail sales rose 0.9 per cent in March. While the figure reversed a three-month slump it was slightly weaker than estimated. Excluding auto sales, retail sales rose only 0.4 per cent instead of the 0.7 per cent increase expected.

The euro bought US$1.0647 and 127.16 yen against US$1.0654 and 127.24 yen.

The single currency was taking support from a Eurostat report showing eurozone industrial production rebounded a solid 1.1 per cent in February after falling in January.

On Wall Street the Dow gained 0.33 per cent, the S&P 500 added 0.16 per cent but the Nasdaq slipped 0.22 per cent Oil prices edged higher. US benchmark West Texas Intermediate for May delivery gained 40 cents to US$53.69 while Brent crude for May rose 38 cents to US$58.81.

Gold fetched US$1,191.15 against US$1,187.95 late Tuesday.

AFP