HONG KONG – Asian stocks closed lower today in cautious trade, as figures showed China’s economic growth accelerated in the first quarter of the year, but the government warned of “significant challenges” ahead.
Tokyo’s benchmark Nikkei 225 ended down more than 1% and Shanghai posted small losses, while Hong Kong and Sydney were closed for holidays.
Shanghai reported its first Covid-19 deaths since the start of its weeks-long lockdown.
China’s largest city and economic powerhouse has stewed under a patchwork of restrictions this year amid the country’s worst Covid-19 outbreak since the start of the pandemic.
The country reported first-quarter economic growth of 4.8%, the National Bureau of Statistics said, as the pandemic threatens Beijing’s ambitious annual growth target.
That figure was up from 4.0% in the final months of 2021.
The world’s second-biggest economy was already losing steam in the latter half of last year as it endured a property slump and regulatory crackdowns.
“We must be aware that with the domestic and international environment becoming increasingly complicated and uncertain, economic development is facing significant difficulties and challenges,” said NBS spokesman Fu Linghui.
“Overall, the data suggest that China started the year well, but as the quarter has moved on, the headwinds have gotten stronger,” said Jeffrey Halley, senior market analyst with Oanda.
“A slowing property market, sweeping Covid-19 restrictions, the Ukraine invasion pushing up base commodity and energy prices, and a central bank still intent on deleveraging sectors of the economy, have all combined to weigh on China’s growth.
“About the only thing missing is a meaningful rise in inflation, which is some small sliver of comfort.”
Oil prices, which have been elevated since Russia’s February invasion of Ukraine, were up again, with Brent Crude topping US$111 a barrel.
Stephen Innes of SPI Asset Management said the rise was “likely to fuel inflation fears and rate hike jitters around the meaningful Fed action required to snuff those fears out”.
Russia is a major global oil and gas supplier, and – along with Ukraine – is also a key player in the grain sector.
The conflict has shaken markets for these commodities, and the impact has been felt from the Middle East to South America.
The war has sent oil prices soaring, with reports swirling about further energy sanctions on Russia.
Central banks in several major economies including the United States, Canada and Britain have already started raising interest rates to contain prices, but the European Central Bank on Thursday kept its stimulus plans and rates unchanged. – AFP, April 18, 2022
