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Global Stocks Pare Gains After China Reports Trade Deficit

13 Apr 2018 4:30 am
By Joanne Chiu 

Asia-Pacific stock markets gave up some of their early gains Friday after China reported a surprise trade deficit for March.

Hong Kong's Hang Seng Index erased its earlier 0.8% advance by the midday break. Stocks in China and Taiwan, which started higher, were also lower.

Japan's Nikkei Stock Average rose as much as 1.2% in early trade, with a weakened yen helping boost Japanese stock prices, but that was cut in half in early-afternoon action.

China's trade balance swung to a deficit of $4.98 billion in March from a $33.7 billion surplus in the previous month. Economists polled by The Wall Street Journal had expected a surplus of $19.6 billion.

The economic data came after gains in U.S. and European equities overnight as President Donald Trump's more conciliatory tone on Syria eased geopolitical tensions.

"Investors tend to react very violently to both good news and bad news," said Jane Fu, a sales trader at CMC Markets. "Any other news that comes up, be it geopolitical or economic, may potentially trigger another round of volatility."

Australia, South Korea and Singapore all held on to their gains of about 0.5%.

Singapore's central bank tightened monetary policy for the first time in six years and first-quarter economic growth was stronger than projected.

Some investors were moving into stocks seen as more-defensive plays on Friday, said Alvin Cheung, an associate director at Prudential Brokerage. They included London-based HSBC, which is also listed in Hong Kong. It was recently up 1%.

In contrast, pork producer WH Group, which had rebounded this week after being hit by U.S.-China trade tensions, fell 3%.

Mr. Cheung expects uncertainties from trade and geopolitics to keep Hong Kong stocks rangebound until June, when the inclusion of Chinese equities into MSCI's emerging-market index draws foreign money to both the city and mainland.

On the currency front, the Hong Kong dollar was just below the weak end of its trading band versus the U.S. dollar. The Hong Kong Monetary Authority has bought a combined 3.26 billion Hong Kong dollars ($415 million) since Thursday night local time to protect the currency.

After Thursday's 0.8% gain for the S&P 500, futures were recently down 0.3% ahead of the U.S. earnings season kicking off in earnest Friday with reports from big banks J.P. Morgan, Wells Fargo and Citigroup.

Ms. Fu said investors have already priced in strong first-quarter results for U.S. companies in general, in part on the benefits from tax reform. "Any good news is just a normal news," but anything that is not so good would trigger panic selling, she said.

Oil futures were recently down about 0.3% in Asia following a fourth-straight gain on Thursday for the U.S. benchmark, which has risen 8% this week to notch its biggest four-day advance in 16 months. It also pushed prices to their highest since late 2014.

Write to Joanne Chiu at joanne.chiu@wsj.com

(END) Dow Jones Newswires

April 13, 2018 00:30 ET (04:30 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.
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