Asian Stock Market: Trades mixed following the weaker Chinese data, PBoC’s rate cut

• Asian stock markets trade mixed on Tuesday.
• Chinese Retail Sales (July) came in at 2.5% YoY versus 4.8% expected; Industrial Production fell to 3.7% versus 4.5% expected.
• Japan's economic growth was 1.5% QoQ, compared to 0.8% expected and 0.5% previously.
• Indonesia's trade surplus declined more than expected in July to $1.31 billion.
• Investors await US Retail Sales, Japanese Trade data, FOMC Minutes.

Asian stock markets trade mixed on Tuesday following the release of downbeat Chinese data and the interest rate cut by the People's Bank of China (PBOC). During the early European session on Tuesday, EuroStoxx Futures gains 0.44% to 4,360 by press time.

At press time, China’s Shanghai falls 0.82% to 3,152, the Shenzhen Component Index slumps 1.42% to 10,604, and Hong Kong’s Hang Sang dips 1.24% to 18,540. India’s NIFTY 50 is up 0.03%, South Korea’s Kospi is down 0.79%, and Japan’s Nikkei gains 0.70%.

In China, the People's Bank of China (PBOC) cut the one-year medium-term Lending Facility (MLF) rate from 2.65% to 2.50% on Tuesday. The unexpected rate cuts by the People's Bank of China (PBOC) fuel fears about China's deteriorating economic outlook. Meanwhile, Chinese Retail Sales for July came in at 2.5% YoY compared to 4.8% expected and 3.1% previously, while the country's Industrial Production fell to 3.7% YoY compared to 4.5% expected and 4.1% previously.

In Japan, the preliminary data for Japan's Gross Domestic Product (GDP) for the second quarter (Q2) of 2023 showed that economic growth was 1.5% QoQ, compared to 0.8% expected and 0.5% previously. In the meantime, the annualised GDP increased to 6.0% from an estimated 3.1% and 2.8% previously. Japan's Economy Minister Shigeyuki Goto predicted a moderate economic recovery before mentioning the need to pay attention to the danger of a global downturn and the impacts of price increases. Goto demonstrated a willingness to respond flexibly to the economy and prices as needed.

On the Indonesian front, the statistics bureau revealed on Tuesday that Indonesia's trade surplus declined more than expected in July to $1.31 billion. Economists surveyed by Reuters estimated a surplus of $2.53 billion for July. In the previous month, a $3.46 billion trade surplus was recorded. Additionally, Imports fell 8.32% year on year to $19.57 billion, compared to the 15.50% a decrease projected by analysts in the survey.

Moving on, the Japanese Trade data and the annual National Consumer Price Index for July will be released from the Japanese docket later this week. Market participants will closely watch the US Retail Sales, FOMC Minutes and the comments from Fed officials for fresh impetus. The events could provide hints for further monetary policy and give a direction for riskier assets like equities, risk-sensitive currencies, etc.