Asia markets slide as investors await key China data

Asia stocks declined Monday in guarded trading, as investors weighed a significant oil deal to reduce output and waited for key China data due later this week that will offer signs about how the world’s second-largest economy in digging itself out of upheaval caused by the coronavirus.

Hong Kong was among markets closed for the Easter holiday. US futures pointed lower.

Oil and the virus were driving sentiment.

Top oil producers agreed to cut petroleum output by one-tenth, following a Saudi-Russia price war launched amid already depressed demand due to the coronavirus pandemic. The deal evolved out of talks involving the OPEC + members and the Group of 20 nations. Prices for Brent crude and West Texas Intermediate rose.

Meanwhile, on the coronavirus front, the US now has the world’s largest number of deaths – more than 22,000 – and warning signs are emerging of a threat to its meat supply. Smithfield Foods, the world’s largest pork processor and owned by Hong Kong-listed WH Group, temporarily shut down its large plant in the state of South Dakota after about one in 15 of its workers came down with the virus.

As happened in China earlier, the US meat supply chain is being disrupted, with some slaughterhouses closed due to the virus, meaning the link from farmers to consumers is being affected.


The outbreak began in China, which launched then-unprecedented lockdowns to contain the virus. Now, China’s factories are firing back up, with the semiconductor industry among those favoured by analysts.

March economic data from exports to industrial production and retail sales will this week give investors the first reading of how China’s economy is recovering from the pandemic damage after months of lockdowns.

The Shanghai Composite Index dropped 0.5 per cent to 2,783.05 at the close, extending a 1 per cent decline a day earlier. The ChiNext gauge fell 1.4 per cent, taking its decline from a February high to 16 per cent. (For in-depth coverage of Hong Kong and mainland markets, go to the Stocks Blog.)

“Asia will be focused this week on China’s Balance of Trade tomorrow, and its Q1 GDP on Friday. Markets are looking for a bounce back in the BoT … a continuation of the improvements in China’s data as the country continues its post-Covid-19 reopening. GDP, though, is expected to shrink for the quarter by 6.2 per cent,” Jeffrey Halley, senior market analyst for Asia-Pacific at Oanda, wrote in a fresh note.
“With so much hope hoisted onto China’s shoulders to lead the world out of the Covid-19 recession, [China] data points are likely to cause strong market reactions on a substantial positive or negative divergence from consensus,” he added.

Elsewhere, Japan’s Nikkei 225 benchmark declined 2.3 per cent. The country is on a new partial lockdown that targets heavily populated areas to try to control spread of the virus, and its government has unveiled an unprecedented near US$1 trillion package to help businesses and households stay afloat.

In South Korea, the Kospi fell 1.9 per cent, while the tech heavy Kosdaq fell by 2.4 per cent.

Meanwhile, in Singapore, the Straits Time Index slipped 0.2 per cent.

Hong Kong, New Zealand and Australia markets will reopen Tuesday. There also was no trading Monday on the Stock Connect between Hong Kong and the mainland.

Economists expect dismal data out of China.

Exports probably slid 12.8 per cent from a year earlier, industrial production fell 6.2 per cent and retail sales slid 9.8 per cent, according to the projections of economists in Bloomberg polls.
Fixed-asset investment slumped 15 per cent in the first quarter, the data showed. China’s economy may have contracted 6 per cent in the first three months, marking the first decline in growth since the data began in 1992, according to the estimates.