Asia rises on Wall Street's record highs while China data misses forecasts

People are reflected in a screen displaying the Nikkei average outside a brokerage in Tokyo, (Representative Image) Photograph:( Reuters )

Reuters Singapore Aug 12, 2016, 04.26 AM (IST)
Asian stocks inched up on Friday, after a surge in oil prices helped propel Wall Street to record highs overnight, while Chinese economic indicators that missed expectations did not dent gains in mainland shares.

MSCI's broadest index of Asia-Pacific shares outside Japan nudged up 0.2 per cent. It was on track to gain 1.9 per cent for the week.

Both China's CSI300 index and the Shanghai Composite rose about 0.5 pe rcent after fixed asset investment, retail sales and industrial output all rose but were below expectations. Both indexes were headed for gains of about 1.4 per cent for the week.

Fixed asset investment from January to July increased by 8.1 per cent from a year earlier, the slowest rate in more than 16 years, compared with expectations for 8.8 per cent.

July retail sales increased 10.2 per cent, versus 10.6 per cent the previous month and a forecast 10.5 per cent. Industrial output rose 6.0 per cent from a year earlier, slowing from June's 6.2 per cent and just missing forecasts of 6.1 per cent.

Hong Kong shares rose 0.7 per cent and were at their highest in more than eight months.

Japan's Nikkei rose 0.7 per cent on a slightly weaker yen, and is poised to end the week 3.7 per cent higher.

South Korea's Kospi, which touched the highest level since July 2015, was little changed. Australian stocks gained 0.3 per cent.

The S&P 500, the Dow and Nasdaq all closed at historic highs on Thursday for the first time since 1999 on higher crude oil and upbeat corporate results.

The pan-European FTSEurofirst 300 stock index also jumped, climbing 0.85 per cent to its highest close since late May.

MSCI's 46-country All World index held close to a one-year high touched overnight.

Supporting investor appetite for risk, oil prices climbed more than 4 per cent overnight after a Saudi oil minister hinted at possible action to stabilise prices and triggered a round of buying.

They retained that momentum on Friday, with US crude futures up 0.5 per cent at $43.72 a barrel, on track to gain 4.5 per cent on the week.

Global benchmark Brent crude climbed 0.3 per cent to $46.18, set to end the week 4.6 per cent higher.

"Asia Pacific markets are set to finish the week on a high following strong leads from European and US investors," wrote Michael McCarthy, chief market strategist at CMC Markets.

"Industrial commodities rose, led by oil, and overnight trading displayed 'risk on' characteristics despite the lack of an obvious trigger. Important data from China may change the course of the trading day."

Global markets will also sift through the string of US data, notably retail sales, due later in the session for latest cues about the world's largest economy and whether it is robust enough to withstand further monetary tightening.

US retail sales are expected to show a 0.4 per cent monthly increase in July, according to the median estimate of 64 economists polled by Reuters.

In currencies, the dollar rose after San Francisco Fed President John Williams told the Washington Post that the US central bank should raise rates this year because of improving labour market conditions and the likelihood that inflation is heading higher.

The greenback inched up 0.1 per cent to 102.035 yen after gaining 0.7 per cent on Thursday, and is heading for a 0.25 per cent weekly rise. The euro was steady at $1.11375 after losing 0.3 per cent overnight.

The dollar index, which tracks the greenback against a basket of six major peers, rose 0.1 per cent to 95.924, but was on track for a loss of 0.3 per cent for the week.

The New Zealand dollar slipped 0.1 per cent to $0.7202 after surging on Thursday to $0.7351, its highest in more than a year after the Reserve Bank of New Zealand cut rates by 25 basis points to 2.0 per cent, a smaller cut than some investors had expected.

The Australian dollar dipped 0.3 per cent to $0.7678 .