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Asian shares rose on Friday after data in China showed pressure on the world's second biggest economy may be starting to diminish.
The news along with easing trade tensions with the US underpinned riskier assets, even as some markets took a breather in late afternoon trade.
European bourses were expected to extend the global rally after Wall Street posted more records. In early European trades, pan-region Euro Stoxx 50 futures were up 0.4 per cent, German DAX futures gained 0.54 per cent and FTSE futures added 0.28 per cent.
China's economy grew 6.0 per cent in the fourth quarter of 2019 from a year earlier, and 2019 growth of 6.1 per cent was the slowest in 29 years, held back by anaemic domestic demand and the damaging trade war with the US.
The data largely reinforced recent signs of an improvement in Chinese business confidence as trade tensions eased, with Beijing and Washington sealing an initial deal on Wednesday to defuse their damaging tariff war.
Beijing is widely expected to introduce more stimulus measures in 2020 amid sluggish investment and demand.
“This is all good news and positive for the China story. All the data coming out, from industrial production, fixed asset to retail sales, they are all showing signs of bottoming out as the trade cycle bottoms out,” said Daniel Gerard, senior multi-asset strategist at State Street Global Markets in Hong Kong.
MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.18 per cent in afternoon trade, trimming earlier gains of as much as 0.4 per cent.
China's blue-chip CSI300 index ended 0.14 per cent higher, down from an earlier rise of as much as 0.67 per cent. The index has rallied more than 8.5 per cent since the beginning of December, fuelled by hopes for improved trade relations with the US.
Australian shares added 0.32 per cent to a fifth consecutive record high close, and Seoul's KOSPI rose 0.11 per cent. Japan's Nikkei finished up 0.45 per cent after reaching 15-month highs earlier in the session.
MSCI's global share index touched record highs and was last up 0.05 per cent.
Analysts say global equities may find it difficult to maintain momentum from their recent rally as optimism over the US-China trade truce gives way to uncertainty over the next steps in trade talks.
While a Phase 1 deal signed by China and the US on Wednesday is seen as defusing the 18-month row that has hit global growth, experts say it is unlikely to provide much balm for broader frictions between the two countries. Most of the tariffs imposed during the dispute remain in place and a number of thorny issues that sparked the conflict are still unresolved.
“The challenge from here is how long we can maintain these improvements,” said Steven Daghlian, market analyst at CommSec in Sydney.
“Speaking of the Aussie market specifically, a 6 per cent gain in two weeks is obviously a massive challenge to replicate in the tail end of the month. You don't really see 10, 11, 12 per cent improvements over the course of a month without any gigantic positive catalysts.”
In the US on Thursday, a combination of upbeat earnings from Morgan Stanley, rising US retail sales, a strong labour market and robust manufacturing data helped to lift Wall Street to record highs.
The Phase 1 deal and the US Senate's approval of a revamp to the 26-year-old North American Free Trade Agreement also boosted investor spirits.
The Dow Jones Industrial Average rose 0.92 per cent to 29,297.64, the S&P 500 gained 0.84 per cent to 3,316.81 and the Nasdaq Composite added 1.06 per cent to 9,357.13.
The US data supported the dollar, which held steady on Friday. The greenback hit eight-month highs against the yen before trimming its advance to rise 0.09 per cent to 110.24. The euro was up 0.04 per cent to buy $1.1140.
The dollar index, which tracks the greenback against a basket of six major rivals, was lower at 97.292.
The rally in equities was mirrored in US benchmark 10-year Treasury notes, which saw yields rise to 1.8285 per cent from their close on Thursday at 1.809 per cent. Yields rise as prices fall.
Commodity markets were quiet, with Brent crude futures falling 4 cents to $64.58 per barrel. US West Texas Intermediate crude futures fell 6 cents to $58.46 per barrel.
Gold was 0.12 per cent higher on the spot market at $1,554.38 per ounce.
Asian shares rose on Friday after global stock indexes and Wall Street posted more records, and as China's economic growth matched expectations in spite of US trade pressures.
The world's second-largest economy grew 6.0 per cent in the fourth quarter of 2019 from a year earlier, and 6.1 per cent for the full year, official data showed on Friday.
While China's growth in 2019 was the slowest pace of economic expansion in 29 years, held back by anaemic domestic demand and the damaging trade war with the United States, it was in line with analyst expectations and within the government's official target.
“This is all good news and positive for the China story. All the data coming out, from industrial production, fixed asset to retail sales, they are all showing signs of bottoming out as the trade cycle bottoms out,” said Daniel Gerard, senior multi-asset strategist at State Street Global Markets in Hong Kong.
Recent data has pointed to an improvement in Chinese manufacturing and business confidence as trade tensions eased, but analysts are not sure if the gains can be sustained and Beijing is widely expected to roll out more stimulus measures.
MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.1 per cent.
China's blue-chip CSI300 index was 0.27 per cent higher, extending a rally fuelled by hopes for improving relations with the United States that has seen it gain 9 per cent since the beginning of December.
Australian shares added 0.47 per cent after setting four consecutive record closing highs in previous days and Seoul's KOSPI rose 0.12 per cent. Japan's Nikkei was up 0.49 per cent after touching 15-month highs earlier in the session.
MSCI's global share index touched new highs and was last up 0.03 per cent.
But analysts say global equities may find it difficult to maintain momentum from their recent rally as optimism over the US-China trade truce gives way to uncertainty over the next steps in trade talks.
While a Phase 1 deal signed by China and the United States on Wednesday is seen as defusing the 18-month row that has hit global growth, experts say it is unlikely to provide much balm for broader frictions between the two countries. Most of the tariffs imposed during the dispute remain in place and a number of thorny issues that sparked the conflict are still unresolved.
“The challenge from here is how long we can maintain these improvements,” said Steven Daghlian, market analyst at CommSec in Sydney.
“Speaking of the Aussie market specifically, a 6 per cent gain in two weeks is obviously a massive challenge to replicate in the tail end of the month. You don't really see 10, 11, 12 per cent improvements over the course of a month without any gigantic positive catalysts.”
In the United States on Thursday, a combination of upbeat earnings from Morgan Stanley, rising US retail sales, a strong labour market and robust manufacturing data helped to lift Wall Street to record highs.
The Phase 1 deal and the US Senate's approval of a revamp to the 26-year-old North American Free Trade Agreement also boosted investor spirits.
The Dow Jones Industrial Average rose 0.92 per cent to 29,297.64, the S&P 500 gained 0.84 per cent to 3,316.81 and the Nasdaq Composite added 1.06 per cent to 9,357.13.
Currencies
The US data supported the dollar, which held steady on Friday. The greenback hit eight-month highs against the yen before trimming its advance to rise 0.05 per cent to 110.20. The euro was little changed at $1.1136.
The dollar index, which tracks the greenback against a basket of six major rivals, was a tick lower at 97.319.
The rally in equities was mirrored in US benchmark 10-year Treasury notes, which saw yields rise to 1.8266 per cent from their close on Thursday at 1.809 per cent. Yields rise as prices fall.
Commodity markets were quiet, with Brent crude futures adding just 3 cents to $64.58 per barrel. US West Texas Intermediate crude futures were also 3 cents higher at $58.55 per barrel.
Gold added 0.05 per cent to $1,553.35 per ounce on the spot market.
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