Asian Stocks Bounce on Strong China Trade Data

Asian stocks are looking generally positive on Tuesday after Chinese exports grew apace in March. The rebound in imports encouraged investors to think demand is improving as part of the pandemic’s recovery.

The MSCI index of Asia Pacific (minus Japan) stocks rose 0.4% on Tuesday, after opening less than 0.1% higher.

In Australia, the S&P/ASX200 deviated from the regional trend and remained flat. Meanwhile, the Japanese Nikkei gained 1.1% in the afternoon session.

Hong Kong’s Hang Seng Index rose nearly 1%. Mainland China’s CSI300 Index advances 0.5% and is holding steady after the release of March trade figures.

South Korea’s KOSPI 200 Index doubled its initial gains and was up 1%.

According to figures released Tuesday, Chinese exports in dollars rose 30.6% in March from a year earlier. Meanwhile, imports soared 38.1% compared to the same period last year.

Imports grew at their fastest pace in four years, which analysts say indicates a post-pandemic recovery in Chinese domestic demand.

According to John Woods, Credit Suisse Asia Pacific Chief Investment Officer, China is benefiting from its recovery. Still, the global economy is also accelerating and recovering, reducing some Chinese export performance in the coming quarters.

Trade data helped reverse the previously weak climate in Asia following the overnight slumps on Wall Street.

The Fed expects a robust economic rebound in 2021

In the United States, the Dow Jones Industrial Average fell 55.2 points, or 0.16%, to 33,745.4. The S&P 500 lost 0.81 points, or 0.02%, to 4,127.99. Whereas the Nasdaq Composite was down 50.19 points, or 0.36%, to 13,850.00.

Eric Rosengren, Federal Reserve Bank of Boston Chairman, said Monday that the US economy could see a significant rebound this year thanks to a more relaxed monetary and fiscal strategy. The country’s labor market is still weak.

Rosengren said that with inflation still below the central bank’s 2% target rate, the current highly accommodative monetary strategy stance remains appropriate.

US inflation data for March will be released later in the day.

The dollar rallied Tuesday from a three-week low against its main rivals, fueled by a rebound in Treasury yields as investors waited on long-awaited inflation data.

Sat Duhra, a Singapore-based portfolio manager at Janus Henderson Investors, said he expects inflation spikes to be temporary. Rapid recovery from the pandemic will result in an extended period of stable growth and low inflation. Duhra stated that the spread between equity and bond returns is still respectable and very interesting.

The benchmark 10-year US Treasury yield stood at 1.6943% in the Asian session. It remained below the 14-month high of 1.776% reached on March 30.