Global stocks hold near 2016 high as China data boosts won, kiwi

[HONG KONG] Global equities held near their high for the year and South Korea's won strengthened as a flood of China data added to evidence that the world's second-largest economy is stabilizing. Japanese shares fell after the country's strongest earthquake since 2011.

The Stoxx Europe 600 Index was little changed, while the MSCI Asia Pacific Index fell for the first time in eight days. The Shanghai Composite Index stayed near a three-month high as China's first-quarter economic growth of 6.7 per cent matched estimates.

The won strengthened along with currencies of resource-exporting nations, while the yen maintained its loss for the week. US crude held above US$41 a barrel before major oil producers meet in Doha on Sunday to discuss freezing output.

Friday's data dump in China showed new credit, industrial output, fixed-asset investment and retail sales all picked up in March, a sign stimulus policies are bearing fruit after the economy expanded last year at the slowest pace in more than two decades. Brightening prospects for China and a rebound in oil prices helped lift global equities over the past two months from their lowest level since 2013.

The International Energy Agency said Thursday it expects crude's supply and demand will move closer to balance after a glut that drove prices to a 13-year low.

"The market already had good expectations about the economic data as the recent run-up is driven by optimism about the economic stabilization," said Zhang Haidong, chief strategist at Jinkuang Investment Management in Shanghai. "Some investors are choosing to sell now that the good news has materialized. The market is now turning its attention to corporate earnings from liquidity."

Citigroup Inc will report first-quarter results on Friday, helping shape expectations for US earnings after JPMorgan Chase & Co's profit beat analyst estimates and Bank of America Corp's fell short of projections.

Euro-area trade data and US industrial output figures are also due, while central bankers and finance ministers from the world's biggest economies are in Washington for the spring meetings of the International Monetary Fund and World Bank. Markets in India and Thailand are closed for holidays.

The MSCI All Country World Index of shares was little changed near its highest close of 2016 as of 8.27 am London time. The Stoxx Europe 600 Index and futures on the Dow Jones Industrial Average declined less than 0.1 per cent after the US measure recorded its strongest close since July. Carrefour SA rose 2.9 per cent to a one-month high after France's largest retailer reported an increase in first-quarter revenue.

The MSCI Asia Pacific Index declined 0.2 per cent, trimming this week's advance to 4.4 per cent. The Shanghai Composite Index fell 0.1 per cent and Hong Kong's Hang Seng Index lost 0.2 per cent, snapping a seven-day run of gains.

China's industrial output expanded 6.8 per cent in March from a year earlier and retail sales rose 10.5 per cent, Friday's data showed. That compared with the median forecasts of 5.9 per cent and 10.4 per cent, respectively, in Bloomberg surveys.

"The latest economic figures are slightly better than expectations but it remains to be seen whether the recovery can sustained," said Zhang Gang, a strategist at Central China Securities Co in Shanghai.

"Investors worry whether this could mean less government stimulus policies going forward." The Topix lost 0.7 per cent following a three-day surge of more than 7 per cent. A magnitude 6.5 earthquake struck the southern part of Japan late on Thursday, killing at least nine people and forcing the closure of some factories.

"We had a lot of gains over the past three days so it's easier to see profit-taking," said Juichi Wako, a senior strategist at Nomura Holdings Inc in Tokyo.

The region where Thursday's quake struck "has manufacturers' plants and bases, and it's possible that there may be effects on individual companies through the supply chains. We may see some temporary buying of construction-related shares and the selling of insurers."

Indonesia's benchmark stock index declined, while Australia's gained. Taiwan Semiconductor Manufacturing Co fell 1.2 per cent after the world's largest contract chipmaker forecast second-quarter revenue well below analysts' estimates.

The won and New Zealand's dollar were the biggest gainers among 31 major currencies, climbing 0.9 per cent and 0.6 per cent, respectively, versus the greenback. Both South Korea and New Zealand count China as their biggest export market.

The yen fell 0.1 per cent to 109.35 a dollar, set for a 1.2 per cent weekly loss. Bank of Japan Governor Haruhiko Kuroda told reporters in Washington that excessive currency gains had corrected somewhat in recent days, damping concern policy makers would intervene after the yen reached a 17-month high this week.

West Texas Intermediate crude rose 0.1 per cent to US$41.55 a barrel, set for a 4.6 per cent weekly advance, as delegates from OPEC and other oil-producing countries started arriving in Doha.

While an agreement to freeze production would help to support oil prices, further gains would be limited as such an outcome is already reflected in the market, Wood Mackenzie Ltd analysts said in an April 14 note.

Forty analysts and traders surveyed by Bloomberg were evenly split over whether this weekend's talks will succeed in capping output, a majority of those who predicted a deal said it would have no impact on actual flows of crude.

Copper, nickel and zinc declined in London, trimming their biggest weekly advances in more than a month. The metals all climbed more than 3 per cent from a week ago.

Soybeans are set for a 4.7 per cent weekly gain, the most since June, after the US Department of Agriculture cut its domestic inventories outlook and forecast an increase in Chinese imports. Prices were also buoyed by speculation Argentina may cut its crop estimate after heavy rain.

Iron ore futures in Dalian dropped the most this month after Rio Tinto Group, the world's second-biggest producer, warned recent price gains aren't sustainable.

The steel-making raw material fell 2.2 per cent on Friday, trimming this year's advance to 27 per cent. China, the world's biggest steel producer, pushed output to a record in March, data showed Friday.

US Treasuries were headed for their biggest weekly loss in more than a month, with the 10-year yield having increased six basis points to 1.78 per cent over the past five days. The yield fell one basis point on Friday.

"There's an unwinding of safety assets to risk assets," said Kazuaki Oh'E, the head of fixed income at CIBC World Markets Japan Inc in Tokyo. "The stock market hitting a record for the year" fueled the shift, he said.

BLOOMBERG