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Asia markets trade mixed as investors wait for China data

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SINGAPORE — Asia-Pacific markets traded mixed Monday ahead of economic data due from China including fourth-quarter GDP figures.

The Nikkei 225 in Japan rose 0.79% in early trade while the Topix index added 0.57%.

Australian shares also eked out gains as the ASX 200 was up 0.11%. The heavily-weighted financials subindex gained 0.33% and the energy sector was up 1.15%.

South Korean shares, however, faltered as the Kospi slipped 0.5% and the Kosdaq was down 0.4%.

The session in Asia follows a mixed finish in the U.S. last Friday, where Wall Street notched a second straight negative week to start the year.

“Markets reacted defensively to disappointing US economic data for December as retail sales fell sharply and manufacturing production declined, hit by a triple whammy of high inflation, ongoing supply shortages and Omicron,” ANZ Research analysts wrote in a Monday morning note.

“We expect the Fed will have to revise up its inflation forecasts and interest rate guidance for coming months at next week’s meeting,” they added.

U.S. markets are closed Monday for Martin Luther King Jr. Day.

China’s economic slowdown

Economists expect data out of Beijing on Monday to underline slowdown in the world’s second-largest economy, in part due to factors like China’s strict measures to contain the omicron Covid variant as well as problems in its property sector and sluggish consumption.

A Reuters poll showed that gross domestic product likely grew 3.6% in the October-December quarter from a year ago — the weakest pace since the second quarter of 2020 and slowing from 4.9% in the July-September quarter.

Last week, U.S. investment bank Goldman Sachs slashed its 2022 forecast for China economic growth from 4.8% to 4.3%.

Currencies and oil

In the currency market, the U.S. dollar traded 0.08% higher at 95.243 against a basket of its peers, after last week climbing from levels near 94.87.

The dollar could “remain heavy this week and head down towards 94.11,” said analysts from the Commonwealth Bank of Australia in a Monday note.

They noted that there are no policy-relevant economic data releases this week or any scheduled speeches from Fed officials that could influence the market pricing for the U.S. central bank’s rate hikes.

We expect interest rate markets to continue to favour a March lift-off to the Funds rate,” the CBA analysts said, adding, “At the same time, the view that omicron is unlikely to derail the global economic recovery is a weight on the counter-cyclical USD.”

Elsewhere, the Japanese yen changed hands at 114.38, strengthening from levels near 115.5 in the previous week. The Australian dollar rose 0.04% to $0.7209.

Oil prices advanced on Monday during Asian trading hours. U.S. crude added 0.69% to $84.4 a barrel.

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