Buoyant Japanese stocks led Asian stocks to modest gains on Monday, helping to offset some of the gloom from soft Chinese data, while the dollar firmed against the euro and yen after receiving a boost from upbeat U.S. indicators.
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.3 percent. Hong Kong’s Hang Seng added 0.3 percent, Australian stocks advanced 0.6 percent and South Korea’s Kospi was little changed.
Tokyo’s Nikkei climbed more 1 percent, buoyed by a weekend media report that Japan was poised to delay a sales tax hike set for April 2017. Hopes for more government fiscal stimulus also favoured Japanese shares.
It held the gains despite a denial by Japan’s top government spokesman on Monday that Prime Minister Shinzo Abe has decided to delay the tax hike.
“There is no such fact. It is utterly groundless,” Chief Cabinet Secretary Yoshihide Suga told a news conference, repeating that the government will increase the levy as planned unless there was a financial crisis on the scale of the Lehman Brothers collapse or a major natural disaster.
Shanghai, lost 0.3 percent after data on Saturday showed China’s investment, factory output and retail sales all grew more slowly than expected in April, adding to doubts about whether the world’s second-largest economy is stabilising.
“Chinese data over the weekend managed to miss market expectations for every single release: credit growth, industrial production, retail sales, and fixed-asset investment,” wrote Angus Nicholson, market analyst at IG in Melbourne.
“The miss on the activity front wasn’t a huge surprise given we already saw a levelling off in the PMIs, but the dramatic slowing in credit growth will be raising some red flags in the already-reversing commodities space.”
Aluminium was stuck near a one-month low and copper was in close reach of a 2-1/2-month low.
Commodities were hurt as the dollar reached a two-week high against a basket of currencies on Friday’s upbeat April U.S. retail sales data, which jumped 1.3 percent for the largest gain since March 2015.
A stronger greenback tends to weigh on non-U.S. buyers of dollar-denominated commodities.
The dollar rose 0.2 percent to 108.88 yen after spiking briefly on Friday to 109.57, its highest since late April, in reaction to the strong U.S. data. The euro was flat at $1.1313 after slipping to a two-week low of $1.1283 on Friday.
The Australian dollar slipped to a 2-1/2-month low of $0.7236 earlier on Monday before crawling back to $0.7287.
U.S. crude oil gained 1.6 percent to $46.95 a barrel after shedding more than 1 percent Friday on the dollar’s gains. Brent rose 1.5 percent to $48.54 a barrel after falling 0.5 percent on Friday.
Output falls in Nigeria and worries about political instability in Venezuela tightened supported crude oil, although rising OPEC output and a stronger dollar capped gains.