That helped investors shrug off data from China that showed industrial production and retail sales growth slowed more than expected in July.
Japan’s broad Topix rose 0.7 per cent and the Nikkei 225 gained 0.1 per cent as investors returned from Thursday’s public holiday. Helping matters was a 0.1 per cent decline in the yen, which was trading at ¥102.06 per US dollar after giving up early gains.
Australia’s S&P/ASX 200 was flat, but underpinned by the energy sector after the price of oil leapt more than 4 per cent overnight. Hong Kong’s Hang Seng was up 0.8 per cent, while on the mainland China’s Shanghai Composite was up 0.2 per cent and the tech-focused Shenzhen Composite added 0.1 per cent.
On Wall Street, the S&P 500, Dow Jones Industrial Average and Nasdaq Composite all closed at record highs concurrently for the first time since 1999, boosted by energy stocks and some well-received results from US retailers.
So far this year, the S&P 500 has gained 6.9 per cent, while the Nasdaq Composite is up 4.4 per cent.
The price of gold, which is sensitive to interest rate expectations, was trading higher at $1,340.14 an ounce in Asia, recovering a sixth of Thursday’s 0.6 per cent loss.
Oil prices continued to climb with Brent crude, the international benchmark, up 0.4 per cent at $46.23 a barrel while West Texas Intermediate added 0.7 per cent to $43.78. Comments overnight from Saudi Arabia’s energy minister that the kingdom could participate in coordinated efforts by major producers to help balance the oil market – prompting speculation of a production freeze – gave prices a tailwind.
Investors were also chewing over a batch of data from China. Industrial production growth slowed in July to 6 per cent year-on-year, from 6.2 per cent the previous month and against expectations it would hold steady. Retail sales growth moderated to 10.2 per cent year-on-year from 10.6 per cent in June, and weaker than expectations. Fixed asset investment grew 8.1 per cent in July from a year earlier, but that was down from June’s 9 per cent pace.
Julian Evans-Pritchard at Capital Economics noted signs of strength in some parts of China’s industry last month, but said that indications of further slowing in fixed asset investment could prompt more policy support to support the economy.
“Activity in industry looks to be holding up reasonably well. . . Nonetheless, the downbeat investment figures raise questions over the efficacy of recent policy easing. While looser monetary conditions appear to be supporting current conditions and have clearly boosted credit growth, the impact of this step-up in lending on investment has underwhelmed,” Mr Evans-Pritchard said.
Analysts at ANZ Banking Group said the data reinforced their view that although China’s real estate sector has peaked, authorities are still concerned about property prices overheating.
“Thus, we believe monetary policy easing will be limited in [the second half], with only another 50bps [reserve requirement ratio] cut on the table. On the other hand, fiscal policy will need to accelerate in the coming months for China to achieve a growth rate of 6.5 to 7.0 per cent this year,” ANZ said.
The Australian dollar, a popular proxy for Chinese growth, softened in the wake of the China data and was down 0.2 per cent at US$0.7684.
The currency is up 0.9 per cent for the week, in spite of the Reserve Bank of Australia on Tuesday cutting interest rates to a record low. Similarly, the New Zealand dollar is 0.7 per cent higher this week — albeit down 0.2 per cent on Friday at US$0.7197 — despite the country’s central bank cutting rates on Thursday and flagging further easing.
The yield (which moves inversely to price) on Japan’s 10-year government bond was down 1 basis point at minus 0.105 per cent as a busy week for debt markets wound down. Bond prices for many sovereigns rallied this week as the Bank of England revived its quantitative easing programme to cushion the UK economy from any adverse fallout after June’s vote to leave the EU.