Asia shares slip as weak China data tipped

Asia shares have mostly slipped ahead of Beijing’s expected release of weak fourth-quarter economic data, although investor sentiment about China’s rebound has remained positive as the global economy edges closer to recession.

MSCI’s gauge of Asia Pacific stocks outside Japan was down 0.18 per cent at 0127 GMT.

China’s economy is expected to have slowed sharply in the fourth quarter due to stringent COVID-19 curbs, dragging 2022 growth to one of the lowest rates in almost half a century and raising pressure on policymakers to unveil more stimulus this year.

Data on Tuesday is forecast to show gross domestic product (GDP) grew 1.8 per cent in October-December from a year earlier, less than half of the third quarter’s 3.9 per cent pace, according to a Reuters poll.

On a quarterly basis, GDP is projected to have contracted 0.8 per cent in the fourth quarter.

The official data will be released at 0200 GMT.

“I think investors will look through the Q4 GDP prints and focus on 2023,” said Redmond Wong, Greater China market strategist at Saxo Markets Hong Kong.

“According to Chinese media, more than half of the 31 provinces and municipalities that have released 2023 work reports are targeting above 5.5 per cent growth for 2023.”

Hong Kong’s Hang Seng Index opened down 0.3 per cent while China’s benchmark CSI300 Index remained flat.

Japan’s Nikkei 225 rose 1.35 per cent as the Bank of Japan (BOJ) kicked off its two-day meeting.

BOJ is under pressure to change its interest rate policy as soon as Wednesday, after the central bank’s attempt to buy itself breathing room backfired, emboldening bond investors to test its resolve.

The dollar drifted off multi-month lows on Tuesday, while the yen was perched at almost seven-month highs as investors held their breath for BOJ’s potential policy shift.

Australia’s S&P/ASX 200 was steady on Tuesday morning, down just 0.01 per cent at 0128 GMT, after hitting a seven-month high on Monday.

European shares reached a near nine-month high on Monday, with the pan-European STOXX 600 closing up 0.5 per cent at 454.6 – its highest level since April 2022 – as global equities continued to build on a new year rally spurred by hopes of a rebound in China’s economy and an easing of prices pressures in the United States and Europe.

US markets were closed on Monday for a public holiday.

“At the centre of the early 2023 financial market debate is how quickly inflation will fade and whether or not major economies will be able to avoid hard landings,” ANZ analysts wrote in a research report on Tuesday.

“The drop in inflation in the US is encouraging, although the fly in the ointment is that this drop is largely coming from energy and goods prices,” the report said.

“Services inflation continues to increase on an annual basis in the US and will likely remain strong so long as the supply-demand mismatch in the labour market persists.”

Two-thirds of private and public sector chief economists surveyed by the World Economic Forum in Davos expected a global recession this year, with some 18 per cent considering it “extremely likely” – more than twice as many as in the previous survey conducted in September 2022.

US crude fell 1.35 per cent to $US78.78 ($A113.32) a barrel while Brent was down 0.41 per cent at $US84.11 ($A120.98) a barrel, although the prices were still near their highest levels this month as easing COVID restrictions in China raised hopes of a demand recovery in the world’s top crude importer.

Spot gold was down 0.15 per cent at $US1915.18 ($A2754.80) per ounce.

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