HONG KONG: China said imports fell at their slowest pace in 19 months in May, fueling hopes of a pick-up in demand in the world’s number two economy, but traders in Hong Kong and Shanghai gave a muted initial reaction.
Beijing said imports declined just 0.4 percent in dollar terms in May, the slowest rate since October 2014, and beating estimates of 6.8 percent in a Bloomberg News survey.
It also said exports slipped a slightly-more-than-forecast 4.1 percent, indicating some stability is setting in.
The figures raised hopes that China, a key driver of global growth, could be approaching the end of a slowdown that has had dire knock-on effects for the rest of the world.
However, after a recent rally the figures were overshadowed by profit-taking, which saw Shanghai end the morning 0.5 percent lower while Hong Kong shed 0.3 percent.
Investors were given a positive lead from Wall Street. The Dow and S&P 500 shifted higher, led by energy firms as crude pushed above $50 to sit at 11-month highs thanks to a weaker dollar and output disruptions in key producer Nigeria.
Japan’s Nikkei swung back and forth through the day following news that the country’s economy grew a little more than first thought in January-March. In the afternoon the Nikkei was up 0.5 percent by the break.
However, Koya Miyamae, an economist at SMBC Nikko Securities in Tokyo, said before the report was released: “Even with the…revision, there’s no change to the picture that Japan’s economy has plateaued and has no clear driver to boost momentum in the months ahead.”
Dollar in retreat
While the news does not flag a rebound in the world’s number three economy, it could sway the Bank of Japan against unveiling any fresh stimulus for the time being. That in turn gave upward momentum to the yen.
In afternoon trade the dollar bought 107.03 yen, against 107.39 yen in New York late Tuesday with the greenback also weighed by the prospect of interest rates being kept low until later in the year.
The euro was at 121.70 yen from 121.97 yen.
The pound was flat against the dollar after recent volatility, with few traders able to gauge whether a June 23 referendum will result in Britain remaining in or leaving the European Union.
Recent polls have shown momentum with the exit camp, fanning worries that such a decision will spur significant market turmoil and slow or stall the British economy.
The World Bank issued a downbeat outlook on the global economy, slashing its forecast for 2016 growth to 2.4 percent this year, the same lethargic pace of last year and much slower than the 2.9 percent tipped in January.
The Bank cited a slower-than-expected rebound in advanced economies, which was holding back developed countries, with world trade and investment both depressed.
It also said there were doubts that the aggressive monetary easing in developed countries, with negative interest rates in several, is doing the intended job of firing up economic activity.
Key figures around 0445 GMT
Tokyo – Nikkei 225: UP 0.5 percent at 16,747.35
Shanghai – Composite: DOWN 0.4 percent at 2,922.98 (break)
Hong Kong – Hang Seng: DOWN 0.3 percent at 21,257.75 (break)
Dollar/yen: DOWN at 107.03 yen from 107.39 yen
Pound/dollar: UP at $1.4546 from $1.4540
Euro/dollar: UP at $1.1370 from $1.1358 late Tuesday
New York – Dow: UP 0.1 percent at 17,938.28 (close)
London – FTSE 100: UP 0.2 percent at 6,284.53 (close)