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Asian shares were mostly higher on Tuesday even though the latest data showed China’s economy is weaker than expected, with domestic demand failing to bounce back as much as hoped for after the pandemic.
Benchmarks advanced in Tokyo, Hong Kong and Seoul but fell in Shanghai and Sydney.
China’s industrial output rose 5.6% year-on-year in April while investment crept up 4.7% from the year before in January-April. But those increases also reflected a big gap from the slow activity at the height of China's “zero-COVID” restrictions, which Beijing abandoned late in 2022.
“While the boost from reopening should still underpin a further recovery in the near-term, the bulk of China’s rebound is now behind us,” Julian Evans-Pritchard of Capital Economics said in a report.
He said the post-pandemic recovery was likely to “fizzle out” in the second half of the year. “Meanwhile, the challenging global picture will prevent much pick-up in Chinese exports,” he said.
Tokyo's Nikkei 225 index surged 0.9% to 29,899.83 continuing a climb toward its highest level since the early 1990s helped by strong corporate earnings and signs that inflationary pressures might be easing.
The Hang Seng in Hong Kong gained 0.4% to 20,044.72, while the Shanghai Composite index was nearly unchanged, at 3,311.06.
In Seoul, the Kospi rose 0.3% to 2,485.58, while Australia's S&P/ASX 200 slipped 0.2% to 7,251.20.
On Monday, the S&P 500 rose 0.3% to 4,136.28 and the Dow Jones Industrial Average edged 0.1% higher, to 33,348.60. The Nasdaq composite climbed 0.7% to 12,365.21.
Some of the sharper moves came from companies announcing takeovers of rivals, including a 9.1% drop for energy company Oneok after it said it’s buying Magellan Midstream Partners. Magellan jumped 13%.
But market was relatively quiet as several concerns dragged on sentiment.
A chief one is the fear of a recession hitting later this year, mainly because of high interest rates meant to knock down inflation. Cracks in the U.S. banking system and the U.S. government’s inching toward a possible default on its debt as soon as June 1 are added worries.
So far, a resilient job market has helped U.S. households keep up their spending despite all the pressures. That in turn has offered a powerful pillar to prop up the economy. On Tuesday, the government will show how much sales at retailers across the country grew last month.
Several big retailers — Home Depot on Tuesday, Target on Wednesday and Walmart on Thursday — will give updates on their earnings in the first quarter of the year.