Sydney: Asian stocks reversed losses on Thursday after Hong Kong media reported upbeat Chinese economic data a day ahead of the official release, and surprisingly strong growth figures from Singapore underscored investor confidence in the region.
Gold edged closer to a record high of $1.476.21 as the US dollar fell to fresh 16-month lows versus a basket of major currencies, while US crude firmed to $107.45 a barrel, helped by a sharp fall in US gasoline stocks.
Hong Kong’s Phoenix TV, citing an unnamed source, reported higher-than-expected increases in Chinese retail sales and industrial output, but also said inflation in the world’s second biggest economy had accelerated.
Singapore impressed after reporting its economy grew 23.5% in the first quarter on an seasonally-adjusted annualized basis, blowing past even the most bullish forecast in a Reuters poll.
Singapore’s central bank also allowed an immediate rise in the value of its currency to help tackle inflation, which it said would likely stay elevated.
The Singapore dollar -- the world’s 12th most actively traded currency -- rose to an all-time high of S$1.2477 per US dollar before slipping back slightly.
The upbeat data helped Asian stocks regain ground with Japan’s Nikkei ending 0.1% higher, having earlier fallen as much as 0.9%. Stocks elsewhere in Asia put on 0.08%, keeping in sight a three-year peak set on Monday.
US stock index futures traded modestly higher, suggesting a positive start for Wall Street.
Australia’s S&P/ASX 200 index was one of the weakest performers in the region, closing down 0.6%, led by a 12% plunge in contractor Leighton Holdings, which flagged a big year loss.
“We’ve had a fantastic run in the previous three weeks. We’re easing back a bit now and that’s probably the way we’ll glide into Easter,” said Austock Securities senior client adviser, Michael Heffernan.
US dollar struggles
By allowing its currency to rise, Singapore could encourage other Asian central banks to let their currencies appreciate further to contain imported inflation.
“The monetary policy is a little more aggressive than we expected, so I think it’s a realization that inflation is going to be a bigger problem in the months ahead,” said Wai Ho Leong, economist at Barclays Capital.
“The recent crisis in Japan is probably adding to inflation pressure, rather than subtracting from growth in the near term.”
Still, last month’s devastating earthquake and tsunami in Japan’s northeast saw Japanese corporate confidence plunge by a record amount in April, a Reuters survey showed.
The US dollar, already under pressure, slipped further in the wake of Singapore’s action.
Chinese Premier Wen Jiabao, in remarks published by the official Xinhua news agency on Thursday, said China should make its currency more flexible to help rein in price rises.
The dollar index, which tracks its performance against a basket of major currencies, plumbed a fresh 16-month trough of 74.642.
There was little market reaction to US President Barack Obama’s freshly announced goal of cutting the US budget deficit by $4 trillion over 12 years through spending cuts and tax increases on the rich.
“The move to fiscal discipline is not likely to weigh materially on growth in 2011,” BNP Paribas analysts wrote in a client note, adding it was unlikely to hit 2012 hard as well given it is an election year.
“But efforts to address the longer-term fiscal picture would indeed be encouraging.”