Asia report: Stocks mixed on China trade data, RBNZ hikes by 50bps

Stocks finished mixed in Asia on Wednesday, with trade data out of China showing exports growing more than expected in March, while New Zealand’s central bank raised interest rates by 50 basis points.

In Japan, the Nikkei 225 was up 1.93% at 26,843.49, as the yen weakened 0.53% against the dollar to last trade at JPY 126.05.

It was a positive day for the benchmark’s major components, with automation specialist Fanuc up 2.51%, fashion firm Fast Retailing rising 2.88%, and technology conglomerate SoftBank Group 2.01% higher.

The broader Topix index was ahead 1.42% by the end of trading in Tokyo, closing at 1,890.06.

On the mainland, the Shanghai Composite was down 0.82% at 3,186.82, and the smaller, technology-heavy Shenzhen Composite dropped 1.74% to 2,012.18.

Fresh trade data showed exports from China grew by 14.7% year-on-year on a dollar-denominated basis in March.

That official customs figure was ahead of market forecasts, with analysts polled by Reuters having pencilled in a rise of 13%.

Imports, on the other hand, disappointed, decreasing 0.1% year-on-year, compared to Reuters-polled expectations for an 8% rise.

Craig Botham, chief China economist at Pantheon Macroeconomics, described March as a “messy month” for China’s trade data.

“Returning from the Lunar New Year holiday, the comparison with February flatters the month’s growth performance, as production resumed,” he said.

“China’s surging Covid cases, meanwhile, disrupted trade and production once more, particularly later in the month.

“In short, we have some work to do before we can get to the underlying picture.”

Botham said a repeat in April seemed unlikely at this stage.

“Imports will likely remain constrained, as Covid restrictions tighten across China, but stocks of finished goods should now be depleted, and with factories still closed, for the most part, they cannot be easily replenished.”

Elsewhere, South Korea’s Kospi advanced 1.86% to 2,716.49, while the Hang Seng Index in Hong Kong managed gains of 0.26% to 21,374.37.

Seoul’s blue-chip technology stocks were on the front foot, with Samsung Electronics up 2.54% and SK Hynix rising 1.8%.

Oil prices were higher at the end of the Asian day, with Brent crude futures last up 1.62% on ICE at $106.33 per barrel, and West Texas Intermediate 1.42% firmer on NYMEX at $102.03.

In Australia, the S&P/ASX 200 was up 0.34% to 7,479.00, while across the Tasman Sea, New Zealand’s S&P/NZX 50 slipped 0.12% to 11,875.00.

The Reserve Bank of New Zealand hiked interest rates in its latest meeting on Wednesday, taking the country’s official cash rate up 50 basis points to 1.5%.

It was the central bank’s fourth rate rise in a row, after it became the first G10 currency to hike rates in the wake of the Covid-19 pandemic late last year.

The hike was also the RBNZ’s largest rise in almost 22 years - the last time it took the official cash rate up 50 basis points was in May 2000, to a comparatively very high 6.5%.

“Today's 50 basis point hike is a clear indication that the [Reserve] Bank is intent on getting ahead of the inflation curve to ‘reduce the risks of rising inflation expectations’,” said TD Securities senior Asia-Pacific rates strategist Prashant Newnaha.

“The bank's decision to hike 50 basis points was guided by Russia's invasion of Ukraine adding significantly to supply disruptions - international factors - and to existing capacity constraints and an already tight labour market - domestic factors.”

Newnaha said the prospect that first quarter consumer inflation of around 7%, and New Zealand’s unemployment rate potentially dropping below 3% in May, implied the Reserve Bank's inflation forecasts from February were starting to look outdated.

“While there are no official projections accompanying today's statement, the bank was on the front foot, indicating that inflation in the first half would be around 7% - an upgrade from the 6.6% forecast in the February monetary policy statement.”

Both of the down under dollars were weaker against the greenback, with the Aussie last off 0.4% at AUD 1.3468, and the Kiwi retreating 1.05% to NZD 1.4751.

The New Zealand dollar had strengthened after the RBNZ’s rate decision, before falling back significantly later in the session.