MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.2 percent after a strong run.
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One a basis of quarter on quarter, the gross domestic product did not show any growth during the April through June quarter, compared with expectations in the market of an increase of 0.2%.
Despite the implication that Monday’s pessimistic GDP data may lead to even more stimulus measures than have already been implemented or announced, the Japanese yen was not significantly affected by the economic data release. The Shanghai Composite index advanced 2.6 percent to 3,130.27 and markets in Southeast Asia were mostly higher. Growth in the world’s third largest economy was flat at 0 percent growth in the quarter, falling below economists’ expectations of a modest 0.2 percent expansion, as weak exports and a fall in business spending dented activity.
“There’s growing realization that the events in foreign economies have far more impact on U.S. rates than previously accepted”, said Michael Matousek, head trader at U.S. Global Investors Inc in San Antonio, citing a research note. This weak economic data could likely help pressure Prime Minister Shinzo Abe’s government and the Bank of Japan to find additional ways to stimulate the Japanese economy. The benchmark 10-year JGB yield was up 2.5 basis points at minus 0.085 percent, while the 20-year yield edged up half a basis point to 0.250 percent.
Reduced expectations for Fed policy moves also hurt the US dollar, which has fallen against a basket of currencies in four of the last five trading sessions.
This week, investors will await Wednesday’s minutes of the Federal Reserve’s July policy meeting for fresh clues on the timing of the next US rate hike as well as USA inflation data. RBC Capital Markets analysts said in a Friday note they expect the level of employment to be “down 20,000 in July relative to June”. It added 93 cents, or 2 percent, to close at $46.97 a barrel in London. “Markets are generally bullish on all fronts”, a DBS commentary said of the USA week-to-come.
In Currency Markets the United States dollar was on the defensive on Monday, pressured by downbeat USA data that tempered expectations of a near-term interest rate hike by the Federal Reserve. The euro was steady at $1.1160 having held in a $1.1050 to $1.1230 range for last couple of weeks. In July, the Cabinet Office lowered its 2016 outlook for so-called real GDP growth to 0.9% from its January estimate of 1.7%.
A man walks past electric quotation boards displaying share prices on the Tokyo Stock Exchange (L) and the foreign exchange rate between the yen and the United States dollar (R) in Tokyo on August 12, 2016.
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Brent crude futures LCOc1 were up 15 cents on Monday at $47.12 a barrel, while US crude CLc1 added 18 cents to $44.67. European markets were up, too, but only by 0.4 to 0.6 percent.
