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Asia-Pacific Shares Lower as China Exports Surprisingly Rise, but Drop in Imports Signals More Trouble Ahead

James Hyerczyk

The major Asia-Pacific stock indexes finished mostly lower on Thursday as mixed economic data from China weighed on investor sentiment. Investors were also encouraged to sell stocks by downbeat U.S. economic data and worries over fresh hostilities between Beijing and Washington after U.S. President Donald Trump said he was watching closely whether China would meet its commitments to increase U.S. goods purchases under the Phase 1 trade deal.

On Thursday, Japan’s Nikkei 225 Index settled at 19674.77, up 55.42 or +0.28%. Hong Kong’s Hang Seng Index finished at 24012.04, down 123.07 or -0.51% and South Korea’s KOSPI Index closed at 1928.61, down 0.15 or -0.01%.

China’s Shanghai Index settled at 2871.52, down 6.62 or -0.23% and Australia’s S&P/ASX 200 finished at 5364.20, down 20.40 or -0.38%.

China’s Exports Unexpectedly Exceed Expectations

China reported that its dollar-denominated exports rose but imports fell for the month of April as movement restrictions to contain the coronavirus outbreak eased.

Data from the General Administration of Customs released on Thursday showed exports rose 3.5% from a year ago while imports fell 14.2% in the same period.

Economists polled by Reuters had expected exports to have fallen 15.7% in April from a year earlier while imports were expected to have fallen 11.2% from a year earlier.

In March, China’s exports fell 6.6% from a year ago, while imports slipped 0.9% in the same month.

China’s trade surplus for the month of April was $45.34 billion as compared to the $6.35 billion economists polled by Reuters had predicted. China reported a trade surplus of $19.9 billion for the month of March.

China’s Services Sector Contracts for 3rd Month as Job Losses Hit Record

China’s services firms wallowed in contraction in April as layoffs hit a record and export orders plunged after signs of improvement in March, a private survey showed, dashing hopes of a quick recovery from the coronavirus blow.

The Caixin/Markit services Purchasing Managers’ Index (PMI) did manage to pull up to 44.4 in April from 43 in March, but remained in a deep slump and far below historic averages.

Meanwhile, Caixin’s composite manufacturing and services PMI, also released on Thursday, picked up to 47.6 from 46.7 in March. Though the rise suggests that the initial shock from the virus outbreak is easing, the reading remained below historical averages.

Major Japanese Indexes Finished Mixed

The blue-chip Nikkei average edged up on Wednesday, helped by gains in semiconductor-related stocks. Chipmaking gear manufacturer Tokyo Electron Ltd rose 3.2% and test device maker Advantest Corp climbed 3.3%, tracking gains in U.S. peers.

The broader Topix index dropped 0.32% to 1,426.73, with air transport and land transport among the worst three performing sectors on the local bourse, down 6.8% and 2.9%, respectively.

Japan extended a nationwide state of emergency on Monday, underscoring expectations that travel demand was unlikely to recover anytime soon.

On Thursday, Japan Airlines shed 6.9% and ANA Holdings lost 6.7% as U.S. peers plunged earlier this week on news that billionaire Warren Buffett had sold his entire stakes in the top four U.S. carriers.

This article was originally posted on FX Empire

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